A world where animal spirits are running wild is also one that has temporarily divorced from fundamentals. Experience tells us this often doesn’t end well.Â
The wealth transfer from Baby Boomers to their offspring, which is in full swing, has got the taxman’s full attention, especially as it pertains to capital gains payments, trust structures and potential breaches of the Tax Act’s Division 7A.
International mandates set to flow again … but not right now
There’s a variation on an old joke doing the rounds: “Q: Why are we all looking forward so much to 2013? A: Because it’s that much closer to 2014.”
The old joke is not that old. It first did the rounds in 2007. And then again in 2008.
Gallows humour aside, 2014 is looking quite good for fund managers in particular, according to a client report from the third-party marketing firm Shed Enterprises.
The problem during 2012, which is likely to continue into 2013, is that investors are not making decisions, or, rather, they have decided to do nothing. Shed’s report, based on interactions with Australian super funds in the past few months, predicts that this will change soon.
It is expected that 2013 will be a slow-but-improving year overall, the report says. And 2014 is the year that funds will review and turn over managers.
Michael Bowen, a senior relationship manager at Shed, says that offshore-managed assets, mainly in global and emerging markets equities and bonds, have grown much more slowly than domestic assets for many years.
According to Australian Bureau of Statistics data about $A263 billion of Australian super fund money is managed offshore, or 16.9 per cent of the total pool. This is comparable with allocations back in 1997 and is significantly down on the level of 19 per cent reached just prior to the global crisis in 2007.
Bowen says, however, that the allocation is predicted to return to about 20 per cent by 2020. The Australian industry is worth about $A1.5 trillion.
The report provides a rare insight into the market for offshore mandates from Australian institutional investors. There are, for instance, about 868 mandates which could be classified as global, international or emerging markets. The top six managers, out of nearly 200 which actively market themselves in Australia, account for 17 per cent of all awarded mandates. The most influential consultant in global equities is JANA, with 179 client funds, followed by Frontier, and the largest investor in that class is AMP Capital, with $A8.3 billion. The most-awarded managers – excluding index managers – are Trilogy Global, MFS, Lazard, Baillie Gifford and Welling
