A key architect of the compulsory retirement savings system lauds its many achievements, stretching from the national economy to the individual. Where it’s double faulting is in serving members – and it needs to be addressed promptly.
With performance and diversification driving demand, these funds are expected to experience four-fold global growth over the next decade to nearly $AU65 trillion.
Franklin Templeton analyses the rising corporate and household debt wave
We observe that the debt wave is at a historic peak in terms of the US dollar value of the debt in issue and appears set to continue growing. This was sustainable with low inflation and plentiful liquidity. These factors have both reversed, leading to a heightened urgency to raise capital. As a result, the traditional view on “fiscal responsibility” seems to have moved from the mainstream of political and economic policy debate to the fringes. Given several secular trends in place, this “wave” is apt to grow in depth and breadth. This process drives an increasingly structural polarization between those countries that can easily continue to issue debt and refinance and those that cannot. This paper focuses on household and corporate debt, assessing the “quality” of investments and the implications of high inflation and high interest rates on investment risk and returns.
