Even as asset owners increase allocations to private credit, investors have been warned that the ultimate test of the asset class has yet to come. As long as returns adequately compensate investors for risk, the sector will continue to attract new money, but its moment of truth will come when borrowers run into trouble.
Australian asset owners have come to the consensus that poor investment governance will cost their portfolio at least to some extent, with 68 per cent saying the return penalty would be as great as 1 per cent per annum or more, according to a report by Frontier Advisors and KPMG.
Insignia Financial has successfully migrated over 94,000 client accounts holding $38.6 billion funds under administration (FUA) from MLC Wrap, MLC Navigator, and associated offers to its Expand platform.
Vanguard Super has reduced its annual administration fees from 0.35 per cent p.a. to 0.33 per cent p.a. with the administration fee cap lowered from $850,000 to $300,000.
Qantas Super has committed $200 million with agriculture investor GO.FARM to transform underutilised agricultural land into horticultural projects in NSW’s Riverina, northern Victoria and other parts of Australia.
Macroeconomics Advisory chief economist Stephen Anthony has predicted that the good times for private credit will continue for another 12 to 18 months for asset owners but said that the economy is “in a bubble” and the asset class is a byproduct of that.
Large amounts of government cash are already flowing to projects (some of which have billionaire backing) but there is limited real action on advancing First Nations’ rights and aspirations; addressing social disadvantage or protecting the environment. Aspiring First Nations project developers will be listening to Treasurer Jim Chalmers’ May 14 Budget speech to hear what new specific action is being taken to help them on their journey to economic self-determination.
Research from Australian Retirement Trust has found 67 per cent of Australians don’t feel their superannuation balance is in a good position for their age.
The majority of Australians (81 per cent) had to change their investment and saving goals in the last 12 months with the primary reason (44 per cent) being the rising cost of living, according to a Findex research.
Australians want to contribute more to their retirement savings during times of economic uncertainties, research by Equip Super found.
Ian Patrick, chief investment officer of the $280 billion Australian Retirement Trust, says the headwinds facing asset management businesses will become an “ongoing reality” as competition for super fund capital heats up. However, it won’t be a cause for more investment internationalisation at ART, as the fund opened a “modest” London office this week to better work with its partners on the ground.
Consultation on the Your Future Your Super performance test has provoked industry pushback against expanding the test into the retirement product and self-managed super fund sectors. The peak financial advice representative association has added its voice to others in expressing reservations about the impact on consumers of a retirement product failing a government-mandated test.
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We acknowledge the Traditional Custodians of this land upon which Conexus Financial sits, the Cadigal of the Eora Nation. We recognise their continuing connection and unique cultural and spiritual relationships to the land, waters and community. We pay our deepest respects to them and their culture, and to Elders both past and present.
