Don't ignore Lifecycle Funds: MercerBY BEN COLLINS | TUESDAY, 13 NOV 2012 11:50AMThe benefits of Lifecycle Funds are not understood in the superannuation sector, and they should be considered as a default option under MySuper, said Mercer. |
Editor's Choice
Vale Mark Johnson
Mark Johnson, a founding leader of Macquarie Group, has passed away.
Inflation hits 4.3%, RBA says it remains 'too high'
Australia's inflation rose to 4.3% in the 12 months to September, according to the latest data from the Australian Bureau of Statistics (ABS).
Cbus creates new role for legal operations
Cbus has welcomed a legal specialist to join the fund in a newly created role of group head of legal operations and strategy, bringing relevant experience from regulators ASIC and APRA.
Dexus to pay $30m in legal bills for leaked airport data case
The Supreme Court of NSW has ordered Dexus to cover close to $30 million in legal costs incurred by Melbourne Airport owner Australia Pacific Airports Corporation (APAC) and its shareholders, after the property giant lost a court fight over claims it improperly shared confidential data while trying ...
Further Reading
Products
Expert Feed
When geopolitics becomes a portfolio risk
Geopolitics is back - again - and Australian investors can no longer treat it as distant background noise.
Does association membership still matter?
With all the changes the advice sector has experienced in recent years, such as regulatory reform and increased education and professional standards ...
Digital assets and where they stand in 2026
So far in 2026 digital assets have captured the headlines largely for the wrong reasons, but that doesn't tell the full story.
Rethinking default design in a changing market environment
The evolution underway in the US DC system highlights the value of periodically reassessing default design assumptions.
Featured Profile
David Sharpe
CHAIRMAN
FINANCIAL ADVICE ASSOCIATION AUSTRALIA
FINANCIAL ADVICE ASSOCIATION AUSTRALIA
A family man, business owner, cricket fanatic and financial adviser, David Sharpe has many facets. One of his biggest legacies, as he steps down as chair of the Financial Advice Association Australia, is leaving the profession stronger than he found it.
The Financial Standard podcast Tune in each week as we discuss the latest developments in Australia's wealth management industry. |  |
The "proven history" around the world should include the experience in the U.S. in 2008. The most conservative TDFs - those for individuals with an imminent retirement - lost between 9% and 41%. A Joint Congressional Hearing was held by the DOL and SEC to canvass the reasons for this failure in risk management. It turns out "nothing goes up in a falling market except for correlation". Diversification doesn't insulate against losses. Any adoption of TDFs should consider this, especially if we systematically rotate investors out of equities and into fixed income, at a point where yields are at intergenerational lows.
The thought of being moved into conservative assets just because I have ticked over age 65 seems irrational. With potentially 30 years ahead of me in retirement, where am I getting growth from to support my income needs? Hard to believe no one has 'come up and challenged him'.
Our members experience has been most positive in running an age based lifecycle default for the last 8 years and over a full economic cycle. This includes a loss of only 4% over the GFC for over 65's compared to the median Balanced loss of - 18% which was inflicted on most retirees. Whilst modeling of increased risk later in life may suggest higher investment returns the key is in matching member volatility tolerance with an acceptable level of investment risk. The end result is happy members with good consistent returns over the full economic cycle. Lifecycle investing works!