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New super calculators put spotlight on fees

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Rice Warner has developed a range of new calculators for Vanguard Investments which allow investors to compare fees between superannuation funds as well as managed funds. The superannuation fund fee calculator projects investors’ superannuation balance over a future period, and allows users to compare fees for up to two products. The calculator can be used to compare the fees of Vanguard’s Personal Superannuation Plan against other industry, retail or corporate super funds, and also allows users to compare super funds that are not offered by Vanguard. A second superannuation calculator projects both the superannuation balance to retirement and the income post retirement, including Age Pension payments.

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New super calculators put spotlight on fees

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Investment decision making framework needs a rethink post-crisis

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While advising clients not to rebalance throughout much of the financial crisis, US-based asset consultant RogersCasey now believes investors should reposition to a “normal” asset allocation position, providing they re-examine what that “normal” is. AMANDA WHITE spoke with chief executive Tim Barron. During the height of the financial crisis, the RogersCasey view was that rebalancing blindly in long-only mandates could be selling something cheap to buy something expensive. “We advised clients not to rebalance, to hold back some powder and wait until the flames in the forest subsided and the view was a little clearer,” says Tim Barron, chief executive of RogersCasey, which continues to provide global research to Australia’s In- Tech consultancy, despite its recent sale to Morningstar (which owns Rogers- Casey competitor Ibbotson Associates in the US).

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Investment decision making framework needs a rethink post-crisis

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While advising clients not to rebalance throughout much of the financial crisis, US-based asset consultant RogersCasey now believes investors should reposition to a “normal” asset allocation position, providing they re-examine what that “normal” is. AMANDA WHITE spoke with chief executive Tim Barron. During the height of the financial crisis, the RogersCasey view was that rebalancing blindly in long-only mandates could be selling something cheap to buy something expensive. “We advised clients not to rebalance, to hold back some powder and wait until the flames in the forest subsided and the view was a little clearer,” says Tim Barron, chief executive of RogersCasey, which continues to provide global research to Australia’s In- Tech consultancy, despite its recent sale to Morningstar (which owns Rogers- Casey competitor Ibbotson Associates in the US).

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Way forward for AA?: Alaska searches for ‘external CIOs’

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The US$32 billion Alaska Permanent Fund has taken a unique approach to asset allocation, re-organising the fund according to how investments respond to economic conditions and searching for four ‘external CIO’ mandates. Alaska Permanent Fund pays a dividend to the people of Alaska once a year, typically in July, and that has created an opportunity to rebalance the fund’s portfolio. But the volatility in the market in the past 18 months has meant funding a dividend that can be up to $1 billion in a 30-day period, putting unwanted liquidity and markettiming pressures on the assets. The board of the fund recently decided to counter this problem with a first-time allocation to cash of 2 per cent. Chief executive, Mike Burns, said with this decision came an overhaul of the way the fund views assets.


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Way forward for AA?: Alaska searches for ‘external CIOs’

by
The US$32 billion Alaska Permanent Fund has taken a unique approach to asset allocation, re-organising the fund according to how investments respond to economic conditions and searching for four ‘external CIO’ mandates. Alaska Permanent Fund pays a dividend to the people of Alaska once a year, typically in July, and that has created an opportunity to rebalance the fund’s portfolio. But the volatility in the market in the past 18 months has meant funding a dividend that can be up to $1 billion in a 30-day period, putting unwanted liquidity and markettiming pressures on the assets. The board of the fund recently decided to counter this problem with a first-time allocation to cash of 2 per cent. Chief executive, Mike Burns, said with this decision came an overhaul of the way the fund views assets.

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ASIC targets risk disclosure in super investment options

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The Australian Securities and Investments Commission (ASIC) is investigating superannuation risk disclosure and the labelling of investment options as part of a research project that will shortly go out for industry consultation. Stephen Rowe, senior manager, superannuation stakeholder team at ASIC said the commission was concerned about the consistency of risk disclosure and had developed a “risk matrix”, a risk management tool which typically shows the likelihood of risks occurring and their impact. Speaking at AIST’s Superannuation Administration Symposium in Melbourne late August, Rowe said ASIC had met with 65 trustees to look at how super funds disclose, measure and assess risk within their investment options.

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ASIC targets risk disclosure in super investment options

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The Australian Securities and Investments Commission (ASIC) is investigating superannuation risk disclosure and the labelling of investment options as part of a research project that will shortly go out for industry consultation. Stephen Rowe, senior manager, superannuation stakeholder team at ASIC said the commission was concerned about the consistency of risk disclosure and had developed a “risk matrix”, a risk management tool which typically shows the likelihood of risks occurring and their impact. Speaking at AIST’s Superannuation Administration Symposium in Melbourne late August, Rowe said ASIC had met with 65 trustees to look at how super funds disclose, measure and assess risk within their investment options.

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AGEST mulls merger offer as CEO gets FEAL honours

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Invited to join the merger between the Australian Reward Investment Alliance (ARIA) and Military Super, the $3.3 billion AGEST Super will accept or reject the offer only after the form and operational details of the new entity become clear. The $17.4 billion ARIA and $2.9 billion Military Super are scheduled to operate under one trustee board for military and civilian government schemes from July next year. The federal government fund invited AGEST to participate in the merger, but Seton said the fund was awaiting further guidance on the form and operational structure of the new entity before deciding if it would join in. “AGEST is saying there’s no reason to change yet,” Seton said.

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AGEST mulls merger offer as CEO gets FEAL honours

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Invited to join the merger between the Australian Reward Investment Alliance (ARIA) and Military Super, the $3.3 billion AGEST Super will accept or reject the offer only after the form and operational details of the new entity become clear. The $17.4 billion ARIA and $2.9 billion Military Super are scheduled to operate under one trustee board for military and civilian government schemes from July next year. The federal government fund invited AGEST to participate in the merger, but Seton said the fund was awaiting further guidance on the form and operational structure of the new entity before deciding if it would join in. “AGEST is saying there’s no reason to change yet,” Seton said.

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Credit default swaps to clear up their act

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Hedge fund managers who bemoan their image problems should spare a thought for Susan Kobayashi. The director of fixed income portfolios for Mellon Capital Management (Mellon CM) was in Australia last month promoting a fund associated with not one, but three phrases made notorious by the meltdown – ‘quantitative’, ‘market neutral’ and, most challenging of all, ‘credit default swap’. In Kobayashi’s favour, Mellon CM’s Credit Market Neutral Fund was one of about three products in the world that actually made money in 2008 – a gross absolute return of 828 basis points, in fact, before its fee of 1 per cent and performance incentive of 20 per cent over cash. Kobayashi said that credit default swaps had been “lumped in with CDOs and SIVs and all the other things with three-letter names”, whereas the CDS market has maintained high liquidity throughout the crisis, and has a reputational problem caused only by isolated players using too much leverage.

Read more

Credit default swaps to clear up their act

by

Hedge fund managers who bemoan their image problems should spare a thought for Susan Kobayashi. The director of fixed income portfolios for Mellon Capital Management (Mellon CM) was in Australia last month promoting a fund associated with not one, but three phrases made notorious by the meltdown – ‘quantitative’, ‘market neutral’ and, most challenging of all, ‘credit default swap’. In Kobayashi’s favour, Mellon CM’s Credit Market Neutral Fund was one of about three products in the world that actually made money in 2008 – a gross absolute return of 828 basis points, in fact, before its fee of 1 per cent and performance incentive of 20 per cent over cash. Kobayashi said that credit default swaps had been “lumped in with CDOs and SIVs and all the other things with three-letter names”, whereas the CDS market has maintained high liquidity throughout the crisis, and has a reputational problem caused only by isolated players using too much leverage.

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Investment Magazine provides in-depth, monthly analysis of trends and developments for all the businesses in which superannuation funds engage‚ including asset allocation, investment manager selection, custody and fund accounting, member administration, group insurance and compliance.

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