The chief executive of the $40 billion fund says that bringing back defined benefit funds could make the public service an attractive career path again and strengthen the social compact with nurses, teachers and police.
The set-up for emerging markets is better than ever, and harks back to the beginning of their decade-long run following the end of the Asian financial crisis. And while Trump has investors running scared, fears about another brushfire trade war are overblown.
Target-date technology for outcomes-oriented options
Target-date funds never really took off in Australia. However, the technology behind their delivery may well suit the new and clear trend to outcome-oriented investing. JP Morgan has built an open-architecture system based on its “cash allocation and rebalancing solution” (CARS).
While CARS is not available in Australia, the system should be of interest to funds which have introduced member-directed investment options or are considering doing so.
Basically, it’s an administration system which sits between the multifarious investments which can go to make up a targeted investment outcome – be it to deliver a certain dollar amount or to maximize returns at a certain date – and the custodian.
The problem for Australia is scale. In a case study produced for its global clients, JP Morgan says: “Offering a target-date fund requires coordination across a number of different parties, including investment managers, record keepers, glide path managers, and back office administration providers. An end-to-end, comprehensive solution at a reasonable price point was most desirable.”
AustralianSuper, a JP Morgan custody client, would be one of a handful of Australian funds which could justify the infrastructure build for such a solution. AustralianSuper’s member directed investment option uses FNZ technology coupled with UBS as broker.
