An uncertain market outlook beggars a fundamental rethink of investment strategy. But institutional investors are sticking with what worked in the past, even when they know it won’t work in the future.
As rates rise and the money fuelled tech bubble pops, private companies – and their investors – are buckling down. The hard question, for which there is no good answer, is about what happens next.
“Most of the new capital that’s come into the markets… has been chasing fads,” says David Chan, portfolio manager at MLC Private Equity. “The latest hot opportunity, whether it be an unprofitable tech company that’s growing very rapidly, or a very large scale buyout that’s the headline of tomorrow’s AFR.”
As funds exit regulatory deadlock and a generation of superannuants enter the retirement phase, super will need a new wave of thinkers to argue some of its toughest debates.
It’s big super’s “once in a lifetime opportunity” to build the future. But as funds look to invest in nation-building in Australia and the Pacific, they’ll want the government to share some of the risk.
The prudential regulator’s superannuation czar says it has no view on whether smaller funds can survive – but that funds must continue to innovate to avoid becoming “footnotes in financial history”.
As homegrown competition intensifies and offshore players eye Australia’s retirement savings, the industry funds are now “frenemies”. Reinvigorating the collaborative model will be the key to their survival.
Industry superannuation has, for the most part, been a roaring success. But it needs to retain its “missionary zeal” if it’s to avoid the same fate that befell the other giants that once dominated the landscape.
Labor and the superannuation industry are still running their victory lap, but concerns around disclosure and consolidation loom large in the background.
The former CIO of Crestone Wealth Management has won seed capital from a number of family offices and individuals for a new global multi-strategy hedge fund.
