AQR co-founder and CIO Cliff Asness talks to ISN about how social media might be making markets less efficient, the cloak and dagger world of alternative data, and why using machine learning means having to “let go of some things you cherish”.
The benchmarks that are supposed to measure performance and create alignment with end investors are working against asset managers, and the industry must find new ways to demonstrate value before it’s too late, according to MFS.
APRA goes deep on super data
APRA wants super funds to reveal everything from how much they pay their executives to granular asset allocation data and what they spend on marketing under a new proposal that will “significantly increase visibility” of how members’ money is spent and invested.
The consultation opened on Tuesday, and APRA plans to collect the data late this year following recent amendments to reporting standards under its Superannuation Data Transformation program. It will initially publish marketing and sponsorship expenditure, as well as payments to related parties and remuneration data.
“These proposals represent an important step forward in achieving greater transparency in superannuation,” said APRA deputy chair Margaret Cole. “It is APRA’s aim to publish as much of the data that we collect as possible, especially where there is a strong public interest in having access to high quality industry data that is comparable across funds.”
Super fund marketing expenses have long been in the crosshairs of both regulators and politicians, with APRA’s 2021 superannuation thematic review finding a host of lax business practices relating to marketing spend. The review turned up several cases of funds entering into multi-year marketing campaigns and sporting team sponsorships without detailed assessments of the benefits of the expenditure or a business case being considered at the board level.
Marketing expenditure was also a sticking point for the Morrison Government, with Tim Wilson, then chair of the standing committee on economics, using questions on notice to determine how much money funds were contributing to Industry Super Australia, the vehicle through which the industry super collective advertising campaign is conducted.
APRA also wants to publish additional aggregated asset allocation data for investments in property and infrastructure by sector, ownership and development stage; alternatives by strategy type; listed equity by market cap and active/passive management; and private equity by development stage and strategy.
“Under these proposals, members would have a clearer and more detailed picture of how their money is being spent and invested, while trustees would be further compelled to remain closely focused on improving member outcomes,” Cole said.
Funds have previously pushed back on revealing too much data about their investments and the managers through which they make them, saying that keeping some information confidential was necessary to create the greatest benefit for members in retirement. But APRA says it will mitigate the “market sensitivity of any information on investment allocations” by publishing them with a 90-day lag and that publishing to this level “will increase the transparency of how members’ money is being invested”.
APRA noted that feedback on previous consultations to publish total industry expenses by category was mixed”, with some funds recognizing the value of creating greater transparency for members and others emphasizing “commercial and member detriment” from the release of sensitive data potentially subject to confidentiality agreements.
“Stakeholders argued that this would be of detriment to members as service providers may not want to provide services to superannuation funds if their confidential pricing data would be made public,” the regulator wrote in its proposal.
