Regulators tightening scrutiny on performance and fees
The introduction of Your Future Your Super (YFYS) which involved the stapling of funds, an annual performance test and an Australian Taxation Office portal where super products are ranked and published, changed the industry beyond recognition. The goalposts have moved and funds must ensure they balance the outperformance of benchmarks while keeping fees as low as possible.
Industry consolidation
The industry is experiencing a period of consolidation like never before, as funds focus on the benefits to members at scale. Funds are exploring their options to merge with other like-minded funds to achieve the scale required to continue to compete within the Australian super fund system.
Diversification
The biggest challenge for super funds is to continue to deliver strong returns for their members. Super funds are seeking investments that are appropriate for the current climate of higher inflation and rising interest rates that will support and meet their members’ immediate and long-term investment goals. To this end, private markets, and in particular private debt, are an increasingly attractive option.
In a market of small margins, even a modest allocation to private debt could help super funds pass the YFYS performance test benchmark.
Private markets are becoming increasingly popular as investors shift parts of their portfolios away from publicly traded assets in order to diversify their risk and return drivers.
Superannuation Client Segment Leader
Alternatives Investment Director
Head of Unlisted Infrastructure
Head of Real Estate Investment
With change, naturally comes challenge.
Will super funds now accept these challenges or be left behind?
Now more than ever,
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