Target date funds tipped to grow
With the value of so-called ‘target date funds’ claimed to have grown by over 50 per cent in the US over the past four years, Russell Investment Group is predicting such arrangements are likely to grow in popularity in Australia.
Russell managing director of retirement services in Australia Heather Dawson pointed to US research showing US assets in lifestyle funds now exceeding $US100 billion, with net clash flows running at about $US24 million a year.
And she said with the majority of assets in employer-financed defined contribution superannuation funds in Australia being invested in default or balanced options, there was significant potential for growth in target date funds.
Target date funds traditionally invest in a mixture of growth and income assets, with the asset allocation altered automatically as people approach retirement.
“Even a 10 per cent share of the Australian diversified fund market — quite feasible when compared to the 60 per cent in the US — would represent over $30 billion in assets,” Dawson said.
“We believe the phenomenal growth in US target date funds is likely to be replicated in Australia as superannuation funds and master trusts respond to individuals’ actual investment behaviour in the new choice environment.”
Recommended for you
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
Australian investors are more confident than their APAC peers in reaching their financial goals and are targeting annual gains of more than 10 per cent, according to Fidelity International.
Zenith Investment Partners has lost its head of portfolio solutions Steven Tang after 17 years with the firm, the latest in a series of senior exits from the research house.
