Alternatives drive push for in-house investment trend

Superannuation funds are bringing investment functions in-house because technology has caught up to managing alternative investments, according to Oliver Johnson, E-Front sales director.

Johnson said super funds' interest in alternative assets had been on the rise due to low returns from traditional asset classes.

Because costs were at the forefront of new legislation, funds were bringing investment expertise in-house to avoid the high costs of investing in alternatives.

He said when a fund reached a certain size in its alternative asset allocation, it made less sense to outsource the portfolio and double-up on costs, which could be expensive.

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"If they were a new super fund, to start up an alternatives platform, I think they wouldn't really get past the board pushing the adviser route anymore - just because of the fees," he said.

Johnson said new technologies that could handle the increased data burden of alternatives were facilitating super funds' move to boosting internal investment expertise.

Smaller funds were also hiring an investment manager or two off the back of technology that could assist in increased transparency requirements and data to provide the reasoning behind complex investment decisions, he said.