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Long haul back for super fundsAustralia’s largest investors have warned that the debt crisis in Europe and the United States economy pose the biggest threat to the local $1.3 trillion superannuation industry and returns on investments could take several years to return to pre-global financial crisis level. A survey of 12 of the biggest super schemes in Australia by The Australian Financial Review found that investment chiefs were also concerned about the prospect of conflict in the Middle East, a rise in protectionism, failure to exploit the strengthening Chinese economy, and wide-spread civil unrest as consumers in some countries potentially face sharply lower incomes and erosion of living standards. After posting the first annual rise in super returns for three years, Australian retirement funds believe the biggest risk to investment gains over the medium term is a sharp slow down in global growth as governments pay down trillions of dollars of debt accumulated during the past three years. None of the super funds cited the potential for a spike in global inflation, a housing market crash in Australia or a sharp slowdown in the Chinese economy as potential threats to share markets returns. Nor did any investment chiefs point to regulatory changes or super funds’ high exposure to growth assets such as equities and listed property. Future Fund Chairman David Murray had noted in July that the performance of super funds was “heavily dependent” on the outlook for equities. Instead, it was the high levels of sovereign debt and the impact of governments paying that debt back that troubled super funds most. The Australian Financial Review – Monday 6 September 2010 |
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