Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
REST Super takes top award, warns about pensions
(Pictured: Damian Hill)
REST Super won the Super Fund of the Year Award plus the Pension of the Year Award at the SuperRatings annual event last week. But Damian Hill, REST’s chief executive, predicted the pensions category would change dramatically in the future.
Hill said that pension products represented the biggest challenge for super funds and that the category candidates for this award would likely look very different next year.
The problem for super funds in recent years has been a very low take-up by retiring members in the funds’ pension products. At the same time, the handful of retail annuity providers, such as Challenger, have gathered a high proportion of available clients following a marketing blitz.
With more members retiring due to the demographic trend, big super funds are looking to enhance their pension offerings.
REST also picked up two subsidiary awards, for best performance for all growth and balanced investment options.
The Best Super of the Year Award, representing best in category for the accumulation phase service and performance by funds, went to Telstra Super, the largest remaining corporate super fund in Australia.
The Rising Star Award, which recognizes the fund which most improved its value proposition to members, was won by Tasmania’s Retirement Benefits Fund.
The 11th annual SuperRatings Awards, at Melbourne’s Sofitel Hotel last Tuesday, followed the research firm’s annual conference: ‘SuperRatings’ Day of Confrontation’, attended by about 240 people across the industry.
Highlights from the conference presentations included:
- Dire predictions for group insurance premiums, due to a big increase in member claims and the entry to the market of legal litigators. Premiums would definitely rise by more than 10 per cent and could possibly rise by up to 100 per cent, according to Mark Stewart of RGA Reinsurance. Anecdotal evidence was also presented of super funds not reacting to member claims inquiries in a proper fashion, by specialist lawyer Adam Tayler, which has led to increased litigator involvement. He said most of his firm’s clients had initially been told by the fund that their application would not be accepted.
- The rise of ‘trust’ among an aware consumer base for financial services companies, where reputation will be the most important thing driving future value, according to a corporate advisor.
- Question marks over whether journalism will be able to deliver the big investigations, which rooted out scandals in the past, because of structural changes in the media industry.
- An unclear view of the ACCC’s likely intervention in fund mergers, from former ACCC chair Graeme Samuel, despite vigorous questioning from SuperRatings founder Jeff Bresnahan. The answer is: probably not for funds which take over much smaller funds, but if the largest two were to merge, then maybe.
- The opportunities for impact investing. Michael Traill, a former senior executive in private equity at Macquarie and now running Social Ventures Australia, predicted impact investing by fiduciary funds would grow to a similar size of asset allocation as PE has done. He was entertainingly supported by Graham Long, general manager of wayside Chapel, who also told the bluest joke in living memory at a superannuation conference. But he’s a reverend, so he got away with it.
