POWERED BY MOMENTUM MEDIA
Super members disengaged with allocations
There is an aversion by Australian investors to engage with their superannuation fund allocations, according to a global Morningstar study.
The study, which surveyed 14 countries, found Australian investors were reluctant to get involved in the asset allocations in their super.
Asset allocation engagement and decision-making was low with default options dominating super, mostly to a growth portfolio. Those who opted for a conservative fund were usually those who had sought advice on their risk tolerance.
“Most default funds generally have an exposure to growth assets of around 60% to 80% of the total portfolio. Hence, growth assets, primarily equities, dominate superannuation assets. The mix of equities will quite often favour domestic equities, but a more balanced approach between domestic and global equities is becoming more popular.
“More balanced or conservative asset allocation is normally found by investors seeking financial advice from a licensed adviser who undertakes a risk-tolerance assessment.”
However, it did say Australian investors were more likely to have a higher risk tolerance because of the defined contribution system compared to those in countries like Japan which had a defined benefit scheme.
“The increasing domination of defined-contribution retirement schemes in several markets, which commence upon entry to the workforce, means that investors are familiar with equity market volatility and tend to build or be defaulted into more-aggressive portfolios with higher equity weightings and lesser bond and cash exposure.
“In contrast, markets with defined-benefit schemes and, in some cases, supported by universal healthcare and a comprehensive social security net, show a reduced need for self-reliance and feature investors who are typically more conservative and take lesser equity market risk in portfolios.”
AUTHOR
Laura Dew
Laura Dew is editor at Super Review. Prior to joining SR, she spent five years working at Investment Week in the UK covering asset and wealth management.
Recommended for you
Australia’s industry super funds have come under fire for distorting equity markets and inflating Commonwealth Bank’s share price, with investment chiefs warning that their size and benchmark-driven behaviour are fuelling mispricing across the ASX.
The sovereign wealth fund has acquired a near-10 per cent stake in Transgrid, the operator of a high-voltage electricity network, in a move it says aligns with its risk-return objectives and long-term investment strategy.
Rest has appointed its new chief investment officer, who previously served as Qantas Super’s CEO for nearly a decade.
AustralianSuper has reinvested in Whitehaven Coal, describing the move as “an investment opportunity” aimed at creating value for its members.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
91.29 3 y p.a(%)
2
L1 Capital International
69.55 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
36.96 3 y p.a(%)
4
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
35.77 3 y p.a(%)
5
GAM LSA Private Shares AU I
34.22 3 y p.a(%)
