POWERED BY MOMENTUM MEDIA
Engineered equities here to stay
Engineered equities is a paradigm change that will be a 10 to 20 year phenomenon and is no longer thought of as a fad, said Northern Trust.
The asset servicing firm said the interest in engineered equities, or smartbeta, has picked up steam in the last three to four years in Australia and is tied for second with the US interest wise, and Europe taking up the most demand.
Northern Trust's managing director for global equity, Matt Peron, told Super Review the problems the Australian market face surrounds finding the ability to efficiently enhance returns.
"People are taking a step back and looking across the plan and asking 'how can I optimise the mix of strategies?' They're forming a way to move from active management to more factor based strategies, it's a very topical conversation right now," Peron said.
Peron said the Australian market is now entering a new phase of early implementation after moving from education on factor exposure and benefits on implementing systematically either passive or factor exposure.
"Now people are entering the implementation stage so we're starting to see big plans, really make meaningful steps and that has started to take hold in Australia," he said.
"We're seeing two to three per cent of the portfolio being implemented with this strategy and then stage three would be when they really go in and it becomes the dominant part of their portfolio. I believe that will happen in a few years."
Head of Australia and New Zealand Asset Management, Bert Rebelo, said there were also issues around risk budget and the fees being paid.
"It's looking at greater efficiencies and getting more bang for your buck. Ultimately they're doing what they think is best for their members and seeing what is most risk efficient and best performing for fees outcome." Rebelo said.
Recommended for you
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
