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.
‘Missionary zeal’ and fighting words: ISN’s top 10 stories of 2022
With super funds still dealing with a wave of consolidation and the existential threat of the Your Future Your Super (YFYS) performance test, it’s no surprise that these stories featured heavily on the ISN leaderboard in the rollercoaster year of 2022. But ISN’s readership also flocked to tales of the super industry’s pioneers, mavericks, and underdogs – drawn, very often, by a punchy headline or personality. Still, superannuation didn’t get all the adulation. The “C” in “IOANDC” stands for custody – and top of the pops was the biggest custody story of the year.
1. NAB ASSET SERVICING CALLS IT QUITS
2022 brought to an end the favourite rumour of the Investor Strategy News readership, though in an entirely unexpected way. After so many potential sales, who expected that NAB Asset Servicing (NAS) would simply close up shop?
Despite recent interest from HSBC, NAS instead announced that it would instead quietly wind down business, with smaller clients expected to move to Apex. It’s as yet unknown how the disappearance of Australia’s last domestic-owned custodian will play out, but industry figures anticipate a scramble through 2023 for the business of its largest clients.
2. JACK DIAMOND: FINANCIAL INNOVATOR… AND MORE
Erstwhile editor Greg Bright’s obituary for the venerable Jack Diamond, who died on February 21 at the age of 66. Diamond was the instigator of Super Member Home Loans, which grew into ME Bank, and “a serial innovator in investment and financial services”.
“Josh Funder sums up Jack’s contribution to society well: “Part of his story is that Jack saw that finance is important and can do important things for people… He contributed ideas, energy and warmth”,” Bright writes.
3. NORTHERN TRUST LOSES ART
The merger of QSuper and Sunsuper was always going to leave some blood on the floor. Sources were aware a custodial death match was raging in the background, and in the end it was State Street that won out. The history makes for fine reading; State Street actually lost the QSuper business to Northern Trust back in 2018 following a review by then-head of investment operations Matthew Heeney.
4. ‘IT WAS A FEATHER IN MY CAP’: MICHAEL BLOCK LOOKS BACK ON EIGHT YEARS AT ACS
Australian Catholic Super CIO Michael Block closed out his time at the fund – a casualty of the Your Future Your Super (YFYS) performance test – Â with a memorable interview where he described ACS as a “delicatessen” (in comparison to the “supermarket” megafunds) and reflected on the creation of its award winning LifetimeOne lifecycle default product.
“Isn’t it interesting that a fund with an investment team of three portfolio managers and two investment operations managers and higher investment admin fees can compete against the massive funds on performance?” Block said. “Credit to John Phokos and Joshua Bloom and Chris Drew and all the others that a little baby $10 billion fund with higher fees has performance that was first quartile most of the time.”
5. ‘COME AT US AND TRY AND BEAT US’: MERCER READY FOR COMPETITION AT SCALE
To many, Mercer’s acquisition of Westpac’s superannuation assets (BT’s Personal and Corporate funds) heralded the awakening of a sleeping giant: the retail funds. While industry funds have made hay of the findings of the Hayne royal commission, their FUM swelling to gargantuan proportions, the BT bolt-on – and Mercer’s existing global reach – means anything they can do, Mercer might be able to do better. CIO Kylie Willment delivered a headline quote that perfectly encapsulates what might be a new era of competition for big super.
6. ‘THEY’RE GOING TO GET SMASHED’: YFYS CHAOS LOOMS FOR CHOICE PRODUCTS
Chant West’s prophetic warning about how the poorly-designed YFYS performance test would unfairly punish the more diverse choice products. The extension of the test to choice has since been postponed as the new Labor government scrutinises whether it’s working as intended. The smart money is on “no”.
7. TOP 10 BALANCED FUNDS IN TOUGH YEAR
The chaos in equity markets through 2022 saw plenty of hysterical headlines about the losses super funds would wear as a result. But data released by research houses like SuperRatings and Chant West in July showed that most super funds had performed admirably through the downswing, protecting their members from the worst damage – and, in the controversial case of Hostplus, even winding up in the green.
8. LESSONS FROM A $5 BILLION FUND IN THE WORLD OF BIGGER IS BETTER
“I think quality is what rises to the surface,” Legalsuper CEO Andrew Proebstl told ISN. “And it manifests itself in a range of different ways in a range of different sized organisations, and the way you go about doing what you do in the future is going to be more important.”
“Big funds, small funds, medium funds are all struggling with the change and the people issues and the need to become. There was once a view that superannuation was like a cottage industry, and there’s no way we can have that now.”
9. SUPER FUNDS LONG-TERM INVESTORS NO MORE AS INDUSTRY GOES ‘LIMP MODE’
The YFYS performance test has pushed a significant chunk of the industry into “limp mode” – that is, they have only a small performance buffer (the accrued performance gap against the test over the past eight years) and need to significantly reduce tracking error in order to survive. In a catch 22, rebuilding that buffer will require taking on more tracking error.
10. ‘THEY LOST THEIR WAY AND THEY DISAPPEARED’: WEAVEN CHARTS THE PATH
Speaking at CMSF in September, Garry Weaven (photo at top) warned that industry funds could easily go the way of the mutual life companies that once dominated superannuation if they don’t retain the “missionary zeal” that put them in pole position in the first place.
