Dealer groups and funds guilty of short-termism
Dealer group investment committees and superannuation fund trustees have become far too focused on the short-term, irrespective of the objectives of their clients and members.
That was the assessment of a Money Management roundtable this week examining Australian equities and the current mood of the market, with Hyperion Asset Management managing director Tim Samway declaring the industry was "suffering a pandemic of short-termism".
"I think we're in a pandemic of short-termism that runs right from the clients through to the companies that we invest in," he said.
Samway said the result of this short-termism was that the managing director of a corporation which didn't get results inside two years was "arguably ready to be sacked".
"That's arguably outrageous, but that's the pressure the funds management industry has placed on corporations," he said.
Samway said superannuation trustees were looking at monthly measures of performance, imagining that there was a thing called "peer risk" when in fact the level of inertia of superannuation fund members was incredible.
"No wonder the clients have a hard time when the whole industry is set up around short-termism," he said.
Lonsec senior investment consultant Veronica Klaus told the roundtable that there seemed to be a huge disparity between the end result the client was focused on and what the industry was actually focused on.
"There is absolutely too much focus on short-term outcomes," she said.
Recommended for you
Women are expected to inherit US$124 trillion through the intergenerational wealth transfer, but Capital Group has found they are twice as likely to rely on social media for advice over a financial adviser.
Challenger Investment Management has raised $350 million during the offer period for its new ASX-listed investment structure.
A week after Lonsec downgraded multiple funds from Metrics Credit Partners, rival research house Zenith Investment Partners has opted to retain its ratings for the same funds.
Strong adviser engagement has helped Praemium reach $1 billion in inflows on its Spectrum offering, with a deal with Western Australian wealth firm Euroz Hartleys expected to add as much as $2 billion.
