Analysis

The big headwind to the emerging markets is fading. But buying big stories about growth and shuffling money from one hot sector to another is no way to play them.

Making predictions is hard, especially about the future. That hasn’t stopped TCorp from calling an RBA pivot, falling US inflation and corporate earnings, and further deterioration in US-China relations.

Institutional investors love private equity but it’s bringing them down. They’re sweating everything from valuations to overcrowding and “private equity bubble risk”.

Much of the work Willis Towers Watson does for Australia’s largest allocators is now around investment governance. But the tyranny of distance means the local scene can be a bit of an “echo chamber”.

The Future Fund pulled some of its new portfolio levers to mitigate the financial damage seen through 2022, but it doesn’t expect markets to get much better anytime soon.

While there’s widespread suspicion that “financial skullduggery” is afoot in private market valuations, the tricky part is the lack of comparisons in their fastest growing segment.

The market view is still too optimistic, according to the BlackRock Investment Institute, and investors aren’t truly considering the risk of a recession.

Inflation-linked income and capital protection are the top reasons for institutional interest in real assets, while APAC and European institutions are leading the way on ESG.

It was non-traditional diversification that saved the top performing super funds in the “torrid” year of 2022, with Chant West’s top 10 funds mostly pursuing larger allocations to infrastructure and private equity.

There’s no end in sight for super fund consolidation, and even top performing funds are merging in an effort to keep up. But what gets lost in the debate is what members think of it all.

After a rollercoaster start to the 2020s, black, white and grey swans now flit through the mind of every money manager. BCA Research has identified five such swans that could shape markets in 2023.

With a shrinking member base, Local Government Super was facing small fund purgatory. A facelift changed its fortunes.