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Member choices squeezing funds
Many more superannuation fund members are making active choices about their investment options and this is impacting the liquidity position of superannuation funds, according to the deputy managing director of Frontier Investment Consulting, Kristian Fok.
Fok told the Conference of Major Superannuation Funds on the Gold Coast that the tightening of liquidity within Australian superannuation funds had not so much threatened their viability as their capacity to maintain control of their asset allocation strategies.
He said compared to the situation which existed with respect to superannuation funds in 2001, more members were making active choices about going into cash and this was impacting on super funds' cash flow and, therefore, their investment flexibility.
Fok said a range of factors had contributed to the problem being encountered by some superannuation funds including the very rapid change in the value of the Australian dollar.
He said superannuation fund trustees would need to remain focused on their liquidity position, and part of this process would be looking at their cash flow projections over the next 12 months.
Fok said combined with these cash flow projections was the need for funds to look at the likely trend in member investment choice decisions.
The managing director of Frontier Investment Consulting, Fiona Trafford-Walker, said many super fund members were exercising member investment choice and looking to access cash investments "at a time when you have to question the timing".
She said it appeared such members had been badly scarred by equity markets and the performance of their funds.
AUTHOR
Mike Taylor
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