March 2010

Cover Story

Maintaining the rage

The one certainty about  superannuation over the next 20  years is that it will grow. It’s the  miracle of compound interest plus  a legislated minimum of the flow of  foregone wages every week.  The structure of the industry,  either through evolution or new  regulation, is a little more difficult  to predict. There will be fewer  but larger funds, perhaps even  more SMSFs [when will they stop  growing in number?] and perhaps  fewer managers.  The influence of sponsoring  organisations, such as unions and  employer bodies, may wane – with  or without possible legislative  change to the make-up of trustee  boards – with the sheer size of  funds and continued push for  professionalism and best practice.

Distribution

Consolidating super funds a Kafkaesque ‘Trial’

When Investment Magazine journalist PHILIPPA YELLAND was instructed to consolidate her four super funds and write a diary of the experience, we were hoping for a tale of straight-through processing and customer satisfaction. We didn’t get one. In fact, she found many similarities between her experiences and those of ‘Josef K.’ in Franz Kafka’s ‘The Trial’, the classic story of a citizen tormented by a remote, inaccessible authority. “SOMEONE must have been telling tales about Josef K, for one morning, without having done anything wrong, he was arrested ... There was a knock at the door and a man he had never seen in the apartment came in.” The Trial, Franz Kafka*

The brief from the editor seemed simple, plus it gave me the chance to mix business with ‘personal admin’. I’d sheepishly admitted to having numerous half-forgotten super accounts (some from jobs best forgotten completely), so I was asked to roll them into one and write about the experience. After all, if the ‘choice of fund’ system is to work as intended, such a consolidation should be a painless procedure which nobody would think twice about doing. Unfortunately, three months later, I must report the procedure is not painless.

Manufacturing

Green properties are better financial performers, says Piet Eichholtz, of Maastricht University in the Netherlands, who recently helped build a global environmental real estate index. But most managers are either unaware of this dynamic or prefer to talk about sustainability rather than take action. However, some exceptions – primarily from Australia – provide a “green” benchmark for institutional investors in property. SIMON MUMME reports.

Administration

Rehypothetical argument: prime brokers forced to change with the times

Colonial First State has joined the growing list of hedge fund investors to have restructured its prime broking arrangements, ensuring that assets not being used to finance positions are moved off the prime broker’s balance sheet. MICHAEL BAILEY reports.

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