Australia
03 September 2013
Superannuation funds have been a bright spot in Australian securities lending. SLT takes a look
Image: Shutterstock
One only has to look at the longevity of Christy Turlington, Linda Evangelista, Kate Moss or Naomi Campbell to see that the 1990s supermodels still have a place on the catwalks today. The same can be said of superannuation funds: initiatives made compulsory by the government in 1992 to ensure that Australian citizens would have funds available when they retired.
Though some critics thought that citizens would be better off with a bundled mortgage/investment product—giving more flexibility to determine where savings are directed—overall the arrangements were a success. And it is not just the local population who have benefitted.
Figures from independent data provider SuperRatings showed that funds began the 2013/14 financial year with a bang.
Growth assets were once again the strongest drivers of returns in July, with domestic and international equity markets in particular performing well. The median superannuation Australian Shares option returned 4.8 percent, compared to a 5.2 percent gain in the S&P/ASX 200 Accumulation Index.
Further falls in the Australian dollar also buoyed returns from international markets, with the median superannuation International Shares option returning 5.8 percent for the month.
Returns across all other asset classes were also positive for the month, with superannuation fund’s diversified fixed interest options up 0.6 percent.
Although some funds stopped securities lending during the crisis, large funds like AustralianSuper kept up the practice.
A report from the chairman of the Australian Securities Lending Association (ASLA), Peter Martin, said: “The local asset pool continues to grow with the mandatory contribution into superannuation funds set to eventually rise to 12 percent from 9 percent by 2019, meaning there is plenty to be optimistic about for securities lending in Australia.”
In a July interview, Martin said that greater understanding of securities lending among market participants, including lending clients like the superannuation funds, was the biggest positive to have come from the events of the past four years.
Giselle Awad, the senior vice president of eSecLending, said that she was seeing increased consolidation of superannuation funds.
“The introduction of certain tax relief for merging funds, coupled with the introduction of MySuper has lead many funds to consider and in fact choose to merge. Some recent examples include First State Super and Health Super and Westscheme with AustralianSuper.”
There has been seismic changes in the securities borrowing and lending market in Australia in the past few years since the credit squeeze. Traditional stock borrow and loan platforms were dismissed in favour of synthetic access products, and regulatory changes were abound.
But the superannuation funds are continuing to be a major supplier to the market, and this strength will only be cemented as funds consolidate and grow organically due to government interjection.
Though some critics thought that citizens would be better off with a bundled mortgage/investment product—giving more flexibility to determine where savings are directed—overall the arrangements were a success. And it is not just the local population who have benefitted.
Figures from independent data provider SuperRatings showed that funds began the 2013/14 financial year with a bang.
Growth assets were once again the strongest drivers of returns in July, with domestic and international equity markets in particular performing well. The median superannuation Australian Shares option returned 4.8 percent, compared to a 5.2 percent gain in the S&P/ASX 200 Accumulation Index.
Further falls in the Australian dollar also buoyed returns from international markets, with the median superannuation International Shares option returning 5.8 percent for the month.
Returns across all other asset classes were also positive for the month, with superannuation fund’s diversified fixed interest options up 0.6 percent.
Although some funds stopped securities lending during the crisis, large funds like AustralianSuper kept up the practice.
A report from the chairman of the Australian Securities Lending Association (ASLA), Peter Martin, said: “The local asset pool continues to grow with the mandatory contribution into superannuation funds set to eventually rise to 12 percent from 9 percent by 2019, meaning there is plenty to be optimistic about for securities lending in Australia.”
In a July interview, Martin said that greater understanding of securities lending among market participants, including lending clients like the superannuation funds, was the biggest positive to have come from the events of the past four years.
Giselle Awad, the senior vice president of eSecLending, said that she was seeing increased consolidation of superannuation funds.
“The introduction of certain tax relief for merging funds, coupled with the introduction of MySuper has lead many funds to consider and in fact choose to merge. Some recent examples include First State Super and Health Super and Westscheme with AustralianSuper.”
There has been seismic changes in the securities borrowing and lending market in Australia in the past few years since the credit squeeze. Traditional stock borrow and loan platforms were dismissed in favour of synthetic access products, and regulatory changes were abound.
But the superannuation funds are continuing to be a major supplier to the market, and this strength will only be cemented as funds consolidate and grow organically due to government interjection.
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