When bal­anced su­per tips too far to riskier side


VOLATILE fi­nan­cial mar­kets are set to pres­sure Aussie savers to ques­tion just how risky their su­per­an­nu­a­tion fund’s bal­anced in­vest­ment op­tion is.

Big vari­a­tions in as­set mixes within funds will cause some mem­bers to worry about what’s in their nest egg.

A ma­jor­ity of work­ers’ su­per is in de­fault bal­anced funds, which of­fi­cial fig­ures show com­prise an av­er­age 70 per cent growth as­sets, such as shares and prop­erty, and 30 per cent de­fen­sive as­sets, such as cash and bonds.

How­ever, Mari­nis Fi­nan­cial Group man­ag­ing direc­tor Theo Mari­nis said some bal­anced funds were a “wolf in sheep’s cloth­ing” be­cause they com­prised up to 90 per cent growth as­sets.

“Any link with a bal­anced fund pro­file is ten­u­ous,” he said.

A large mar­ket cor­rec­tion would re­sult in “mas­sive un­der­per­for­mance” by so-called bal­anced funds that were re­ally growth funds, Mr Mari­nis said, so mem­bers needed to know just how their money was in­vested. We’re five months into the 2018-19 fi­nan­cial year and the na­tion’s biggest bal­anced su­per funds have a neg­a­tive year-to-date in­vest­ment re­turn af­ter sharp falls in shares. Their high­growth op­tions have fallen fur­ther, and even their con­ser­va­tive in­vest­ment op­tions are neg­a­tive, hit by low in­ter­est rates. Rain­maker In­for­ma­tion, the re­search group be­hind the Select­ingSu­per fund com­par­i­son ser­vice, de­fines a bal­anced port­fo­lio as hav­ing be­tween 55 and 75 per cent in growth as­sets.

Its ex­ec­u­tive direc­tor of re­search, Alex Dun­nin, said there were sev­eral def­i­ni­tions of “bal­anced” but none were uni­ver­sally ac­cepted.

“Yes, the term is very con­fus­ing. But be­fore we get too ex­cited, the is­sue only mat­ters if you’re try­ing to com­pare funds or de­com­pose why they did well or didn’t,” he said.

Many peo­ple did not care too much about the term “bal­anced”, Mr Dun­nin said, and sim­ply wanted their fund to in­vest for good long-term re­turns with­out tak­ing on ex­ces­sive risks. “Re­cently, some peo­ple in su­per­an­nu­a­tion have been say­ing bal­anced funds should be a 50:50 mix be­tween growth and de­fen­sive as­sets, but that would make for very con­ser­va­tive port­fo­lios.”

Mr Mari­nis said the Pro­duc­tiv­ity Com­mis­sion should set rules to de­fine in­vest­ment pro­files, such as “bal­anced”, “con­ser­va­tive” and “high growth”.

“The po­ten­tial for peo­ple to rely on terms which are fun­da­men­tally mis­lead­ing should be re­moved,” he said.

But Mr Dun­nin said na­tional rules were un­likely. “If we can’t agree on the for­mal def­i­ni­tion of what a free-range egg is, how will we be able to de­fine what a ‘bal­anced’ port­fo­lio is?”

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