POWERED BY MOMENTUM MEDIA
Fund managers suggest alternatives
Fund industry executives at the Association of Super Funds of Australia conference in Brisbane have called on the super fund industry to start to consider more alternative asset investments than just traditional alternative assets in their portfolios.
QIC Strategy head of alternative investments James Dick said that investing in normal alternatives would not stave off the risks of gross domestic product growth (GDP) and interest rates, which affect every asset class.
"The core risks that we have in our portfolios, which are equities and bonds, always come down to the same kind of economic risks: GDP and interest rates. We find it's really, really hard to diversify away from those two risks," Dick said.
More intense investment in gold, using options to profit from market volatility, reinsurance, and investing in the trade in used aircraft parts were suggested as real alternative assets that would not suffer as equities traded badly.
Super funds could use options in such a way that would not be ruinously expensive for investors, to change a future distribution, according to Triple 3 Partners chief investment officer and executive director Simon Ho.
"It's a tragedy that institutional investors in Australia use options so little," Ho said.
There is an 80 per cent chance that volatility will go up when the S&P goes down, and options could take advantage of that causal relationship, Ho said.
Investors should also invest more heavily in gold, which had intrinsic value and is liquid and uncorrelated to other asset classes, according to the managing partner of Baker Steel Capital Managers David Baker.
It performs well in both an inflationary and a deflationary environment, Baker said.
Recommended for you
The lower outlook for inflation has set the stage for another two rate cuts over the first half of 2026, according to Westpac.
With private asset valuations emerging as a key concern for both regulators and the broader market, Apollo Global Management has called on the corporate regulator to issue clear principles on valuation practices, including guidance on the disclosures it expects from market participants.
Institutional asset owners are largely rethinking their exposure to the US, with private markets increasingly being viewed as a strategic investment allocation, new research has shown.
Australia’s corporate regulator has been told it must quickly modernise its oversight of private markets, after being caught off guard by the complexity, size, and opacity of the asset class now dominating institutional portfolios.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
92.15 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
53.24 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
43.15 3 y p.a(%)
4
DomaCom Shoreline North Coogee
36.26 3 y p.a(%)
5
GAM LSA Private Shares AU I
35.87 3 y p.a(%)
