Super

Rising demand for global small- and mid-caps has seen Bell Asset Management awarded a $500 million mandate from Hostplus.

If reducing the number of funds was its goal, Your Future Your Super has been a wild success. But as an indicator of performance, it leaves a lot to be desired.

The “embers of optimism” are fading every day, and the $30 billion Equip Super is preparing for the big one. Still, there’s hope – however small – that the worst may be avoided.

It’s not quite over, but the dislocation in equity markets and forced selling is leaving plenty of bargains on the floor. Super fund CIOs will be particularly glad for “the strongest tool in their kitbag”.

As super funds swell to gargantuan size and downward fee pressure intensifies the heat will be on all funds to rein in significantly outsourced investment models.

One number will never tell the whole story, and a new and improved performance test could comprise as many as nine metrics, according to Chant West. This time around, Treasury is actually listening.

While Australia’s superannuation system is the envy of most of the world, it still needs to move from helping people accumulate money to helping them spend it.

Passing the performance test is no excuse for not merging, according to APRA, and the prudential regulator will still be giving small funds the nudge to consolidate where they feel their size isn’t sustainable.

A new review will address some of the unintended consequences of Your Future Your Super. But while super funds are no doubt holding out for a hero, there’s probably no perfect performance test.

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.