POWERED BY MOMENTUM MEDIA
Super funds face more inflow pressure
Cuts and delays of dividends will put further pressure on superannuation funds’ investible flows, according to Crestone Wealth Management.
Crestone said with unemployment likely to rise and wages fall, contributions were likely to be under more pressure and COVID-19 withdrawals would likely rise.
“If dividends are also being cut or delayed, this will further pressure superannuation funds’ investible flows. UBS estimates these could fall by half in the next 12 months (from $89 billion to $44 billion),” Crestone said.
“This, of course, could be a modest negative demand impact for domestic equities (and ease selling of the Australian dollar to fund global equities), albeit the fall in equity prices is also driving some positive equity demand through rebalancing asset allocation targets.”
It pointed to UBS data that found over the past couple of years, member contributions had decreased while withdrawals had increased.
“The drivers of this are not hard to find. In terms of inflows, that’s likely to reflect both lower wage growth, as well as Government policies restricting concessional and non-concessional contributions to super,” the firm said.
“The pick-up in outflows likely reflects, in part, ageing demographics and more people entering pension phase (as well as no longer contributing). The consequence is that in 2018-2019, distributions, dividends and interest have grown to be more than 90% of the cashflow available for super funds to invest each year (with only 10% from net member contributions).”
Recommended for you
Super funds had a “tremendous month” in November, according to new data.
Australia faces a decade of deficits, with the sum of deficits over the next four years expected to overshoot forecasts by $21.8 billion.
APRA has raised an alarm about gaps in how superannuation trustees are managing the risks associated with unlisted assets, after releasing the findings of its latest review.
Compared to how funds were allocated to March this year, industry super funds have slightly decreased their allocation to infrastructure in the six months to September – dropping from 11 per cent to 10.6 per cent, according to the latest APRA data.
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
31.73 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
30.15 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.71 3 y p.a(%)
