Citing signals of economic transition and diversified benefits, Amundi recommends a significant portfolio allocation to gold following its +30 per cent surge since 2023. Investor Strategy News
Australia’s biggest super funds disagree on what the new Your Future, Your Super performance test should look like, but they both think the consequences for failure should be just as weighty – and apply to everybody equally.
Credit’s ‘day of reckoning’ and the warnings super can’t ignore: ISN’s top stories of 2023
The stories that ISN’s readers flocked to in 2023 are a cross-section of industry trends, breaking news and searing takedowns of the assumptions that underpin the system in which we all work. And in keeping with this publication’s official motto, almost every single story is a piece of news you can use.
10. How Maple-Brown Abbott fits into the Future Fund’s new investment order
The Future Fund’s announcement that it would re-enter active equity management with an allocation to small cap equities raised more than a few eyebrows among the industry. After all, can a $250 billion sovereign wealth fund get the alpha it needs in small caps? Maple-Brown Abbott, the fund manager to which it handed the mandate, certainly thinks so.
“We’re pretty confident that what we see over the next 10 years could actually be different,” Phillip Hudak, co-portfolio manager of Maple-Brown Abbott’s Australian small companies strategy, told ISN. “The ability to add alpha in many markets – particularly small caps – there’s the potential for that to be exploited given the overrepresentation to index, low cost and quantitative strategies.
9. ‘You never want to accept how bad it is’: AustralianSuper’s unlisted property problem
AustralianSuper CIO Mark Delaney’s admission that the $300 billion super fund had pursued the “wrong strategy” in commercial property provided a rare insight into the problems the country’s biggest investors can run into as they look for assets where they can stash billions of inflows.
“We were overweight retail and had more international property than Australian property,” Delaney said/ “Both of them were the wrong decisions. And with property when you’ve got something underperforming it’s very hard to get out of it because you never want to accept how bad it is until it gets really bad.”
8. My father’s table: Orwellian doublespeak and the great ‘retire rich’ lie
“Even if we were to raise superannuation contributions from 12 per cent to 15 per cent, it still wouldn’t be enough to ‘retire rich’,” writes ISN contributor Rob Prugue. “Even our own regulator likes to play this game with its unproven ‘name and shame’ policy for those super funds who fall inside fourth quartile peer rankings, as every first-year investor knows about the power of mean reversion.
“Selling today’s fourth quartile manager could see the investor miss out on tomorrow’s first quartile performer. But what if we look at this question differently, changing the mindset from ‘retire rich’ to ‘goals-based investment’?”
7. Why the chief of this $4 billion fund says it’s not a holdout – just ‘old fashioned’
Funds with FUM under $10 billion are getting increasingly hard to come by, but Bill Watson, the chief of First Super – one of the very first industry funds – say it’s not going anywhere.
“We’re not here for the sake of being here – we’ve got to be able to deliver good quality personal service that allows members to get to a happy retirement, and do it at modest price while generating good investment returns,” Watson told ISN. “The quality of service cannot be used as an excuse and it can’t eat up returns.
6. ISA, AIST join forces for a fresh start
The associations that have long acted as the connective tissue of the superannuation industry are now facing the same cost and regulatory pressures as the funds that comprise their member and owner base. This year, the venerable AIST – the first true industry fund association, and the organiser of the annual Conference of Major Super Funds – announced that it would merge with lobby group ISA to create the Super Members Council, a new voice for a more powerful, more concentrated industry.
5. The three warnings big super can’t ignore
Most funds say they’re laser focused on member service, but they still need to do better on unlisted asset valuations and retirement income. And while APRA needs to be more realistic about the administrative burden and costs faced by funds, funds that fail to heed their warnings could go the way of the dodo.
4. For internalisation, Aware puts its faith in Odin (and Alpha)
It’s easy to get distracted by the numbers and lose sight of the systems that underpin one of the biggest trends in superannuation. With Aware Super looking to manage $125 billion of assets in-house, it needed to invest in a significant uplift of its operational platform to give people “the best view of the portfolio and the risk within it”.
“It’s very easy to talk about Odin as a project of systems, but it’s about people,” Michael Clavin, Aware Super head of income and markets, told ISN. This project is about ensuring the investment we’ve made in growing our investment team from 80 people to 130 now and 200 in the next few years (pays off) by giving those people the best tools to create the best member outcomes.”
3. How Cbus will manage $50 billion by itself – and another $50 billion with help
Construction industry super fund Cbus is well on its way to managing half its assets in-house, and is depending on three “buckets” to do it: the scale-up of existing strategies; the launch of adjacent strategies where the fund thinks it can leverage the capabilities of an existing team; and opportunistically adding new strategies.
“What’s hard is building out the requisite capability ahead of the curve,” Cbus chief strategy officer for investments Alexandra West told ISN. “It’s no good bringing in an infrastructure transaction team if you don’t have sophisticated tax and legal support internally for them to be able to act quickly on deal flow. It’s no good bringing in a new portfolio strategy if you don’t have the data and analytics capability for the PM to manage that portfolio and do attribution properly.”
2. Credit’s day of reckoning is upon us
A timely analysis by ISN contributor Michael Block questioning the quality of all that ‘high quality’ private credit big investors can’t get enough of these days. But beyond Block’s investigation into the bubblier parts of the asset class, nearly everything readers need to know about investing is in two maxims at the top of the page: don’t put all your eggs in one basket; and the bigger the party the bigger the hangover.
1. BNP Paribas takes all at Insignia Financial
The tale of BNP Paribas’ “Steven Bradbury-style win” was ISN’s most read story of the year, and for good reason: everybody likes an underdog. Brought in as a stalking horse to keep the preferred vendor honest on price, BNP wound up walking away with the whole $200 billion. The process was triggered by MLC’s search for a new custodian as its old service provider, NAB Asset Servicing (NAS) winds down its operations. The unofficial motto of ISN is that a story never really ends – you keep finding bits and pieces of it in other stories down the years. And while only a little time has passed since NAS announced its intention to exit the market, it’s likely that the story it’s kicked off will keep unfolding for a long time yet
