WTW

Against a backdrop of increasing market complexity, the models that have for decades underpinned the way investments are made are no longer as useful as they once were, and threats to the financial system still lurk in its plumbing.

The collision of transition and physical risks could see “significant economic damage” and system-wide asset losses, according to WTW, and conventional risk management and allocation techniques don’t apply.

Pure play equities managers bore the brunt of market turbulence and lost mandates to super fund consolidation and the Your Future Your Super performance test. But diversified and alternatives managers fare better than most.

Big funds are looking for help with investment governance as they internalise more and more of their resources, according to JANA, and it’s also seeing a lot more demand for guidance on net zero objectives.

Calls to liquidate the Future Fund and use the proceeds to pay down government debt have grown louder in recent weeks but doing so won’t come without a cost according to analysis from WTW.

Treasury is fine-tuning the Your Future, Your Super performance test ahead of its next iteration in August. While the updates could pave the way for a better test, its extension to trustee-directed products is cause for consternation.

Active management might be back in a big way but asset managers need to make sure they’re getting what they pay for: skill, not luck. Figuring out manager style and factor biases is key.

The level of alpha that hedge funds generated in the age of quantitative easing was “lackluster”, but rising market volatility now offer “a richer opportunity set for skilled managers.”

Australia’s superannuation system is leading the world in pensions, but the broader market is still missing opportunities on stewardship and technology. The Thinking Ahead Institute’s 2022 Global Pension Assets Study has named Australia the world’s number one pension market, with 20-year pension asset growth of 11.3 per cent per annum in US dollar terms. The…