Super-sized super powers up
Thursday, 15 July 2010 1:05pm
The adoption of MySuper and Superstream reforms outlined in the final report of the Cooper Review can only make Australia's super funds more formidable on the global stage, said a finance technology expert.
Peter Hill, managing director of investments solutions group SimCorp Asia, said that if the government adopts the recommendations, the new system will expose which super funds are operating at an optimal level and those that aren't.
He said his company has already seen how scale has become a game-changer for their pension fund clients, which includes the Ontario Teachers' Pension Plan (OTPP).
It is among the largest pension funds in Canada with assets of $140 billion - more than treble the size of the biggest super fund in the country (the Cooper Review noted it as $41 billion but other research numbers elsewhere are higher).
He said that given its scale, the pension fund can manage more investments in-house and is now starting to invest in assets directly (OTPP was behind the Transurban infrastructure takeover bid, which was rejected).
"It seems to me that the Canadian model is an interesting one because these funds have sufficient scale," said Hill.
"Fundamentally, they're managing a significant portion of their funds in-house and regardless of managing it in-house or outsourcing some parts of it, they are able to implement systems that give them transparency because they have the scope and scale."
For example, SimCorp's Canadian pension fund clients are able to see the overall position of the managed funds or whatever they're invested on and, more importantly, see their performance on a daily basis.
"With the smaller funds, they are not able to get that access to daily information and that level of look-through is dependent upon what sort of reporting cycle their fund manager is in," said Hill.
"It is scale. Some super funds locally are doing a lot of things manually today because they're not big enough to invest in more sophisticated systems. If you're larger, you have sufficient scale to manage the money yourself and you're then able to invest in systems to make you more efficient."
Michelle Baltazar
