Funds management drives economy

David Murray

The dynamic nature of the current funds management industry is characterised by leading individuals devoted to new ways of doing things, according to Future Fund chair David Murray.

At a recent financial services presentation, Murray referred to the Australian industry as a finance system that is challenging models of asset allocation.

He specifically referred to the language that is being used at the moment whereby asset classes are divided into two distinct groups: traditional and alternative.

“We’re talking in a funny language at the moment about asset allocation having certain categories, and everything else being alternative.

“In a sense, it’s all becoming alternative. We’re seeking, researching what is different about one asset class to another asset class and why and how you put it in a portfolio model in a new and exciting way, and that’s producing massive flows of money into different investments that are actually helping fuel progress in our economies,” he said.

He also spoke about the change in thinking that is occurring within companies and their board selection methodologies, driven in part by conscientious investment analysts demanding greater value from potential investment prospects.

“Within companies, management is saying they don’t have the luxury of the old times any more,” he said, referring to the traditional process where company boards were able to hand-pick preferred board directors and members.

“As much as you think those things are important, analysts and investment managers are dictating more. This is having the effect of increasing returns to equities from managing better.”