As Michael Dwyer observed at the Fund Executives Association Ltd conference last month: fund members do not move their accounts, no matter how good or bad the performance, just as they never change their bank accounts. The chief executive of First State Super was exaggerating, of course, but most of his colleagues in the room would agree. However, if Hugh Mackay, the social researcher, is right, that might be about to change. Opening the conference Mackay took the audience on an entertaining journey through the psyche of the Australian populace over the past 25 years, culminating in what he believes to be a massive mood swing in recent years. The nub of this was that Australians had become disengaged in politics, the economy and other big-picture aspects of life from the late 1990s through to about 2005-2006. And then, for a variety of reasons, we started to become engaged once again.
Super funds be wary: we’re in a period of engagement
As Michael Dwyer observed at the Fund Executives Association Ltd conference last month: fund members do not move their accounts, no matter how good or bad the performance, just as they never change their bank accounts. The chief executive of First State Super was exaggerating, of course, but most of his colleagues in the room would agree. However, if Hugh Mackay, the social researcher, is right, that might be about to change. Opening the conference Mackay took the audience on an entertaining journey through the psyche of the Australian populace over the past 25 years, culminating in what he believes to be a massive mood swing in recent years. The nub of this was that Australians had become disengaged in politics, the economy and other big-picture aspects of life from the late 1990s through to about 2005-2006. And then, for a variety of reasons, we started to become engaged once again.
An industry fund initiative that nobody can knock
As financial services is dragged screaming towards the fee-for-service model, there’s been a lot of malice coming to the surface, not least that directed towards the industry funds, who are already largely there. That ill-feeling might manifest itself in a cranky response to APRA’s whole-of-fund super performance statistics, as useless as they admittedly are. Maybe it comes out less publicly, for instance by feeding an Australian journalist an erroneous hatchet-job about the Conference of Major Super Funds, confident in the knowledge they won’t bother ringing to check the facts.
An industry fund initiative that nobody can knock
As financial services is dragged screaming towards the fee-for-service model, there’s been a lot of malice coming to the surface, not least that directed towards the industry funds, who are already largely there. That ill-feeling might manifest itself in a cranky response to APRA’s whole-of-fund super performance statistics, as useless as they admittedly are. Maybe it comes out less publicly, for instance by feeding an Australian journalist an erroneous hatchet-job about the Conference of Major Super Funds, confident in the knowledge they won’t bother ringing to check the facts.
New super calculators put spotlight on fees
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Normal 0 false false false MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:”Table Normal”; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:””; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:”Times New Roman”; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} 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.Investment decision making framework needs a rethink post-crisis
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).
Investment decision making framework needs a rethink post-crisis
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).
Way forward for AA?: Alaska searches for ‘external CIOs’
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.
Way forward for AA?: Alaska searches for ‘external CIOs’
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.
ASIC targets risk disclosure in super investment options
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.
ASIC targets risk disclosure in super investment options
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.
