POWERED BY MOMENTUM MEDIA
Superannuation funds missing out on emerging market opportunities
A rigid approach to investing may be stifling superannuation funds' opportunities in emerging markets, according to East Capital Asia chief executive Michael Hanson-Lawson.
Super funds were largely governed by consultants and likely to allocate 1 or 2 per cent to emerging markets, he said, with the funds likely to be invested in Asia.
But self-managed super funds were more flexible and willing to place larger allocations to emerging markets, Hanson-Lawson said.
He said advisers to self-managed super funds he had recently spoken to had allocated between 3 and 10 per cent to emerging markets.
"I think these groups are ahead of their time and most people feel the allocation here [Australia] may be 1 or 2 per cent to emerging markets, but over time that's probably going to grow," he said.
East Capital last month launched a fund focusing on the Russian domestic market. It has over 20 years history in the region and now invests in 24 countries. Hanson-Lawson said it was the largest fund manager in the area.
Despite the Russian state maintaining control of largely "inefficient" banks, oil and gas industries, Russia's domestic economy delivered good returns and had a promising long-term future off the back of high incomes and high levels of university education he said.
He said inflation, interest rates and mortgages were low. Due to the Government's policy many people owned their own homes and so had low levels of private debt.
Wages were three times higher than pre-Putin levels, and 68 per cent of the country was considered middle class in a World Trade Organisation study on the BRIC countries (Brazil, Russia, India and China) two years ago, according to Hanson-Lawson.
"Over time these economies are going to grow, they're going to be much bigger in the world economy, allocations are going to have to grow, it's a matter of time if you're looking longer term," he said.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
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(%)
