Super funds look at responsible investment

There are at least a few ways in which super funds can approach responsible investment strategies, according to Parametric’s research paper.

The study, titled “Responsible Investing in a peer sensitive world”, found that not only could there be little-or-no loss even to short-term returns for super funds from embracing responsible investing, but it would  also offer up some tips for return enhancement through the process.

According to Parametric’s managing director, research, Raewyn Williams, one of the ways super funds could address peer-risk concerns when embracing responsible investments approach would be to partner with a responsible investing implementation manager to help assess how much a responsible investing approach would really impact their performance.

As far as portfolio construction was concerned, risk gaps created by a responsible investing approach could be refilled by a responsible investing manager with quantitative skills.

Williams also stressed that portfolio construction was only one way that super funds could potentially promote responsible investing, with active ownership having the attraction of avoiding potential performance drag and delivering on the upside.

Further, super funds with ‘the capacity for innovative thinking and a conviction around responsible investing’ could also use their ideas to refill any potential short-term return gap left by some investing approaches.

“Fifth, our pragmatic observation is that super fund trustees who feel constrained by peer risk in relation to their default MySuper options may feel less peer-sensitive in relation to their Choice options,” Williams said.

“Longer term, there is an opportunity for super funds to consider how to free themselves altogether from peer sensitivity and short-termism, which works against true member-centricity and can constrain funds from implementing good ideas.”

Related Content

Fund and insurer rebuked on TPD assessment

A Superannuation Complaints Tribunal (SCT) determination has sent a clear message to superannuation fund trustees and insurers that they should not r...more

Super choice may bring unforeseen problems

Consumers may be disengaged from their superannuation but there is insufficient evidence to attribute this to lack of choice and competition, accordin...more

Talking hooey on super

The Association of Superannuation Funds of Australia (ASFA) has hit back at claims by the Grattan Institute and others about the relevance of superann...more



Add new comment