In a recent publication, the Australian Financial Review calls out superannuation funds as having been on an “equities joyride”. And, following a recent ASX slump, former Prime Minister Paul Keating suggests tapping into fixed interest investment.
Keating’s primary reason is that fund members are increasingly vulnerable to share market downturns sparked by global emergencies. Whilst superfunds are making strides, Mr Keating believes more needs to be done. He warns that “the funds have got to think, as our community ages, we don’t want all the risk in growth” and therefore, “having a balance of reasonably well performing [fixed interest assets] should occur.”
Anne Anderson, the head of fixed income and investment solutions at UBS, notes that shifting demographics and market fluctuations will force change. “The reason people have shunned fixed income compared to more mature savings markets is that cash rates have until the last couple of years been attractive, so you haven’t been penalised … cash rates are heading lower … so investors have to find something else and it is not equities.” “The day of reckoning is coming,” she says.