Australian superannuation funds were looking at increasing their allocations to alternative investments as well as bolstering governance amid market volatility, ageing populations and tighter regulations, State Street research showed.
The paper, titled ‘Pensions with Purpose — Meeting the Retirement Challenge’, which surveyed 400 pension fund professionals globally, said 65 per cent of Australian respondents intended to increase their exposure to real estate in the next three years.
Private equity and real estate were the top two sectors funds planned to invest more in over the next year.
State Street head of sector solutions Australia and New Zealand, Sinclair Scholfield, said that while there is no one-size-fits-all strategy to meet all challenges, super funds were trying to own the right talent, strategy, risks and efficiency gains.
“This research underscores the need for super funds to develop a clear mission and sustainable strategies to ensure success for an ever-expanding universe of savers,” he said.
Many funds were strengthening their governance amidst pressure to be more transparent in their complex multi-asset portfolios and disclose the book value of unlisted assets, and 45 per cent of respondents wanted to increase training and education for board members to manage portfolios that were tied up for longer periods.
Almost half the funds wanted to increase the detail and frequency of reporting to the board over the next year, while 61 per cent said they would modify the balance of responsibilities between board and management.
More than a third waned to improve transparency to members on the fund’s governance and investment performance, while 70 per cent of respondents said they would revise employee incentive models over the next year, and 43.5 per cent said they would increase their autonomy of their investment function.
More than three quarters (77 per cent) said they would more likely hire a manager with environmental, social, and governance (ESG) experience, as 78 per cent said they were moderately interested in increasing their ESG over the next three years.
