Comment

If greed is good in the world of private equity, it’s anathema to super funds and other pension plans with members that will never make as much money as the people who manage their retirement savings.

Breaking superannuation into three different funding models may not be the right answer, former Lazard executive Rob Prugue writes, but at least it cuts through the fallacy at the heart of our superannuation ideal. 

The crippling doom loop between the banks and the real economy we saw in 2008 is unlikely to feature in the coming recession, says Ruffer’s Jamie Dannhauser, who is more concerned about a violent liquidation in financial markets.

Those that have made high returns by overpaying for higher-risk/lower-quality credit have been lucky and credit conditions are unlikely to be so easy in the future, writes Michael Block. Now is the time to take a very thorough look at one’s credit exposures.

Genuine uncorrelated alpha is the holy grail of investments, writes Michael Block, but managers and strategies that can actually generate it are hard to find. So what’s a poor boy to do?

The scrutiny applied to internal managers rarely matches that applied to external managers, writes Rob Prugue. But underperformance is still underperformance, and if something goes wrong the member wears the risk.

As Australian superannuation assets approach A$4 trillion, politicians on both sides of the divide will be tempted to dip into this massive nest egg to meet their fiscal needs, writes Rob Prugue.

Basing an investment strategy on the goldilocks investment markets of the last 35 years gives rise to considerable risk, writes Michael Block, and now might be the time to get out of growth assets.

With prospective portfolio returns likely to be lower than they have been in the past, the incentive to reduce risk and enhance returns is greater than it has ever been. The investment maths is compelling, but regulatory risk might overpower it writes Michael Block.

Advances in computer modelling have bred a false sense of comfort, writes Rob Prugue, as too many have stopped challenging econometric outputs and blindly implement them without truly understanding their consequences.

Treasurer Jim Chalmers appears to have set himself another impossible task: ending the super wars. But legislating an objective for superannuation and urging funds to take part in nation building projects will only inflame them.

Your Future Your Super is poorly implemented, draconian, stifles innovation and has proven to be a gigantic – and expensive – waste of time. Other than that it’s a really good idea, writes Michael Block.