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Superannuation legislation will force a change in the way Australians look at retirement savings and how those savings are invested, while super funds are likely to question the role of illiquid assets in their portfolios.
Those are just two of the 10 investments trends being flagged by Mercer for 2010, with the company’s business leader for investment consulting in Australia, Simon Eagleton, suggesting that by the middle of this year, the recommendations of the Cooper and Henry Reviews may have generated a radical re-evaluation of super funds’ investment strategies.
At the same time, Mercer suggested that a weaker global banking system would create opportunities for private credit and that emerging market growth would outstrip developed markets.
The Mercer analysis also suggested that the global financial crisis has created significant pressure on super funds that have a heavy reliance on unlisted assets.
It said this had created a liquidity mismatch for such funds between their obligation to meet members’ switching or rollover requests and the ability to realise assets for cash at short notice.
“We expect such funds to reduce their strategic allocations to illiquid assets in the future,” the Mercer analysis said. “At the same time, other funds will continue to look for diversification opportunities, including in unlisted assets.”
