Maritime uses risk overlay strategy to MySuper option

Maritime Super will adopt Milliman's managed risk strategy (MMRS) to its default MySuper option from 1 July, aimed at controlling extreme volatility and limiting capital losses.

As one of the first funds to add a comprehensive managed risk overlay within a MySuper structure, Milliman Australian practice leader, Wade Matterson, said it marked a turning point in the industry.

"Members need strong investment returns but find themselves facing greater uncertainty in a post-global financial crisis world. Unfortunately, many risk management processes in the market come at significant cost, provide marginal protection or produce unpredictable results," he said.

"Maritime Super's decision to expand its relationship with us shows that funds can offer all members effective risk management in a cost-effective structure such as MySuper."

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Also commenting, Maritime Super chief executive, Peter Robertson said MMRS provided its members with access to growth assets with added protection.

"We value our relationship with the Milliman team — allowing us to implement innovative risk management strategies to offer a solution that supports investment growth and delivers improved financial outcomes for our members, particularly for those who don't make an active choice," he said.

The MMRS overlay employs derivatives in a systematic fashion to manage risk, allowing funds to continue managing the bulk of their assets unhindered.