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Proposed YFYS changes do nothing to address index hugging, according to AustralianSuper, and super funds should be compared to a universal industry benchmark rather than a larger and more complex set of indices in the performance test.
Megafunds are outstripping APRA’s ability to regulate them effectively, according to a panel of super executives, while private asset valuations are a source of “real tension” between funds and the government despite its big nation-building push.
Genuine uncorrelated alpha is the holy grail of investments, writes Michael Block, but managers and strategies that can actually generate it are hard to find. So what’s a poor boy to do?
There will likely be more changes to the controversial Your Future Your Super regulations following the “initial response”. Meanwhile, the government is pressing on with super fund involvement in nation-building projects.
Funds that have failed the Your Future Your Super performance test need to improve their communications on underperformance and product closure, according to ASIC.
Big and small funds alike can do well for their members, and what’s more important than size is how they use it. But the risks of having a highly concentrated industry have been “underplayed”, according to ANU academic Geoff Warren.
As Australian superannuation assets approach A$4 trillion, politicians on both sides of the divide will be tempted to dip into this massive nest egg to meet their fiscal needs, writes Rob Prugue.
Basing an investment strategy on the goldilocks investment markets of the last 35 years gives rise to considerable risk, writes Michael Block, and now might be the time to get out of growth assets.
APRA’s “utopian ambition” for organic super fund consolidation might not be realised, leaving a long tail of small funds. More drastic measures could be needed.
While APRA “doesn’t feel the need to start each year with a shiny new set of initiatives”, it’s still planning on scrutinising super funds’ valuation practices and giving more “sub-scale” funds the nudge to merge in 2023.
