POWERED BY MOMENTUM MEDIA
Increased cash allocations bad news for retirement savings
Limiting equity exposure and upping cash allocations could result in inadequate retirement savings, investment manager BlackRock has warned.
BlackRock Australia's head of scientific investments Michael McCorry said relaxing the long-only constraint that binds many funds to an equity benchmark could increase investment returns and raise confidence in the superannuation system.
"Switching to cash can protect portfolios in the short term, but it can also increase the risk of inadequate returns over the long-term," he said.
McCorry also noted that government bonds were no longer as reassuring as they once seemed. Rather than opting for the appearance of safety by swinging into cash or government bonds, McCorry said investors should give more thought to less constrained equity investing.
"In simple terms, the long-only constraint is a costly shackle on investment managers, because it effectively provides only one way of adding value - that is, outperforming stocks," he said. Typically, research also produces insights into companies that are poised to underperform, McCorry said. Therefore, when allowed to sell these stocks, managers have a second way of adding value for clients, he said.
AUTHOR
Angela Welsh
Recommended for you
Rest has joined forces with alternative asset manager Blue Owl Capital, co-investing in a real estate trust, with the aim of capitalising on systemic changes in debt financing.
The Future Fund’s CIO Ben Samild has announced his resignation, with his deputy to assume the role of interim CIO.
The fund has unveiled reforms to streamline death benefit payments, cut processing times, and reduce complexity.
A ratings firm has placed more prominence on governance in its fund ratings, highlighting that it’s not just about how much money a fund makes today, but whether the people running it are trustworthy, disciplined, and able to deliver for members in the future.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
76.97 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
76.46 3 y p.a(%)
3
UBS Solactive Global Pure Gold Miners UCITS ETF Dis USD
51.13 3 y p.a(%)
4
Global X GlobalX FANG+ ETF
45.15 3 y p.a(%)
5
Select Baker steel Gold Institutional
43.78 3 y p.a(%)
