Top fund managers reveal how they are navigating some of the toughest markets in nearly 30 years.
The nation’s $3.4 trillion in superannuation assets are at a crossroads as the threat of more inflationary shocks and the continuing poor performance of shares and bonds forces managers to reconsider asset allocations.
The bulk of the nation’s industry and retail super assets are held in about 50 balanced funds. A balanced fund typically contains about 70 per cent equities, property and infrastructure with the rest in what are called defensive assets, such as fixed income and bonds.According to Chant West, Hostplus Balanced, the nation’s top performing balanced fund, produced the top return of 1.
Losses by the other 46 balanced funds range from less than 1 per cent to BT Active Balance’s dip of nearly 8 per cent. Sawtell-Rickson’s fund lost about 2 per cent during the past 12 months but has returned about 8.5 per cent over a decade. Suzanne Branton, chief investment officer for CareSuper’s $20 billion Balanced Fund, which accounts for about 75 per cent of members and assets under management, was another top 12-month performer despite losses of about 1.7 per cent. The fund has posted gains of about 9 per cent over 10 years.Branton says: “Investments can do well but will increasingly need to rely more on dividends, coupons, profits, cash flow and rents.
Growth funds, which aim to deliver returns of more than 3.5 per cent over inflation over the longer term, had generated an average annual return of 7.9 per cent over the past 30 years, compared to a typical return objective of 6 per cent. “This is an enormous out-performance,” he says.
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