POWERED BY MOMENTUM MEDIA
UniSuper reassures members on liquidity
Members of big industry fund UniSuper have collectively switched $2 billion from growth to defensive assets, according to the fund’s veteran chief investment officer, John Pearce.
However, the fund is claiming sufficient liquidity to comfortably manage the switching.
The confirmation of the switching has come at the same time as other funds have confirmed increases in member investment switching and as both UniSuper and AustralianSuper were reported to have undertaken a downward revaluation of their unlisted assets.
In a message to members, Pearse said that the fund’s conservative approach to liquidity had stood it in good stead.
“Despite members having collectively switched $2 billion from growth to defensive assets (mainly the cash option), we’ve been able to comfortably manage without selling shares at prices we believe are too cheap,” he said.
“Another way of looking at it—we’re effectively using our cash to buy the shares that members are selling. The strength of our liquidity position is such that we plan to continue the strategy for the foreseeable future.”
Pearce also sought to reassure members about the funds cash option, notwithstanding declining interest rates.
“Unlike bonds, there have been no surprises with cash, and that particularly applies to our cash option which is conservatively managed,” he said. “In a world chasing yield, we’ve seen evidence of funds increasing the credit risk in their cash options to enhance returns. We have never been tempted.”
“We work on the principle that the cash option is there to preserve wealth, not grow it. As interest rates trend toward zero, we would expect returns on the cash option to follow and they may even dip to slightly negative after fees and taxes. However, the only way our cash option could incur a permanent loss of capital is in the event of a bank default, which we consider highly unlikely.”
Recommended for you
A member body representing some prominent wealth managers is concerned super funds’ dominance is sidelining small companies in capital markets.
Earlier this month, several Australian superannuation funds fell victim to credential stuffing attacks, which saw a small number of members lose more than $500,000.
Small- to medium-sized funds have become collateral damage in an "imperfect" model for super industry levies, a financial institution has said.
Big business has joined the chorus of opposition against the proposed Division 296 tax.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
93.34 3 y p.a(%)
2
Global X GlobalX FANG+ ETF
37.15 3 y p.a(%)
3
GAM LSA Private Shares AU I
33.96 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
29.68 3 y p.a(%)
5
Plato Global Alpha A
28.73 3 y p.a(%)
