Analysis

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.

Big super funds are getting even bigger. But as consolidation continues – and stapling kicks in – they’ve got a new problem that can’t easily be overcome: they’re more alike than different.

Custodial news raced up the ISN editorial leaderboard this year, even while mergers and acquisitions and the flawed Your Future Your Super (YFYS) performance test dominated the front page.

Institutional investors the world over are increasing their allocations to private equity, even though they don’t know how much risk they’re taking on. And in 2023 they expect ESG stocks will underperform.

Howard Marks doesn’t place much weight in macro forecasts, but has helpfully provided one of his own for the years to come. In his view, nearly everything that used to work won’t work now.

Stung by the harsh correction in the US equity market, sovereign wealth funds are looking further afield. And they’re beginning to question whether the pace of their private markets investing can be maintained.

The only reason private equity hasn’t suffered as much in this downturn is the discretion that sponsors have over its valuation. That’s going to change – and so is investors’ willingness to believe the impossible.

After a damaging year, the “massive technical headwinds” for emerging market debt are easing. And the biggest opportunities might be the smallest parts of the benchmark.

While hopes of a ‘soft landing’ abound, global pension funds are a little more cynical. A stagflationary environment is not just possible, but likely, and hedging against it will be a herculean task.