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Super funds are missing out on investment opportunities due to risk aversion following the global financial crisis.
According to the chief executive of the Centre for Investor Education, Frank Gullone, who recently returned from trips to the US, Asia and the UK, superannuation funds have become much more risk adverse and fund managers are missing investment opportunities for fear of getting it wrong.
“This is a worldwide phenomenon as fund leaders wait to see a sustainable trend in the investment markets and are reluctant to make a move without various assurances or risk minimisation measures in place,” Gullone said.
“Many of these funds are effectively adopting a ‘wait and see’ approach to investment right now. They are opting for a more passive approach to investment.”
He said fund managers’ risk strategies were found to be inadequate in the wake of the global financial crisis and this was a key factor in the shift to conservatism, which also reflected the mood of fund members.
“As we saw in Australia, many fund members switched to the cash option in their superannuation fund, and this has also happened overseas. As a consequence, it’s put pressure on trustees to become more risk adverse.”
