YFYS

A big chunk of super funds are now in “limp mode” as their buffer against the performance test evaporates. And sustainable investing is getting harder when even tobacco exclusions eat up the tracking error budget.

Performance concerns for sustainable investing have risen to the fore as the Your Future Your Super (YFYS) test shortens investment horizons. The wider return outlook is more challenged too.

“In general, it is a healthy environment for hedge funds, with allocation from institutional investors expected to rise. As markets brace for uncertainty, investors expect hedge funds to offer positive returns while reducing portfolio risk.”

Super fund data companies are rushing to beat deadlines for June 30 figures, with heightened interest from industry participants and members. The median balanced fund was minus 3.3 per cent, SuperRatings said.

The performance test for Choice products has been paused, and the Albanese Government has launched a sweeping review into the Your Future, Your Super (YFYS) reforms. So what comes next?

As the new Labor Government explores pathways to 15 per cent, the superannuation industry needs to examine whether that’s really in the best interests of members.

The performance test as it stands isn’t “fit for purpose” when it comes to choice products. And its bright line nature means tweaks are needed for MySuper products too.

A new report from CEM Benchmarking shows that the Your Future Your Super (YFYS) performance test lifts system-wide outcomes. But size of fund is no silver bullet.

The regulator says it doesn’t “blindly adopt” a big is good, small is bad approach, and is concerned the industry is consolidating too quickly.

While Australia’s biggest asset owners are “extremely sophisticated” on ESG, the shackles of the idiosyncratic Your Future Your Super (YFYS) benchmarks are still holding them back on portfolio decarbonisation.