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(February-2002) Here’s the bad news first
This time last year, Super Review’s focus was on the disappointing average super fund returns of around 6.9 per cent for calendar 2000, the unending flow of super funds into master trusts, and the looming introduction of the SIS strict liability regime and how it might inadvertently turn trustees into criminals if they weren’t careful.
If this was bad news for many in the super industry, then things only got worse.
This year, most funds would be happy to achieve returns of 6.9 per cent for their members. Some of the funds vanishing down the outsourcing road these days have assets of $400-$700 million and it seems, the introduction of the strict liability regime wasn’t enough. Judging from what’s emerged from various government inquiries or papers lately, the industry might be wise to brace itself for additional regulatory controls like capital adequacy and licensing requirements.
This year too, with the Financial Services Reform Act coming into play and poor returns being reported to members, funds will not only have to focus on fees and charges and how these are disclosed, but also on explaining why these are justified (if they can).
Lately there seems to be a lot said, always by outsiders, to imply that this industry is made up of people who earn astronomical amounts to cover each other’s back, so that no one has to take blame for the resulting returns, which usually hug the index anyway.
Recently I got a submission from a freelancer who said of super fund managers: “Who knows what they do with your money. No doubt they invest it in blue chip goodies or in their best mates’ ‘u-beaut deals’ but refrain from investing in ‘young’ companies headed by reckless tech-head mid-20s CEOs that know nothing about the brave new world.”
And later: “They can’t help it if they live off other people’s money, because in this big bad world, someone has to.”
I wasn’t sure where he researched his article, but it did leave me with the impression that 2002 is going to be another busy and challenging year for this industry.
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