Morningstar - Q3 2022 - 29

" More-personalized solutions are going to be
really critical, as is the ability to segment members
using more-sophisticated data and systems ...
because everyone's retirement journey is different.
At the moment, super funds are lucky to know
what their members' age, account balance, and
gender are, let alone assets outside of super or
other personal circumstances. "
Growing numbers of younger people are turning
to self-managed superannuation funds in
the search for personalization. The broader super
industry is likely to follow suit, says Bradley.
After years of chasing returns in illiquid unlisted
assets-for example, a consortium of
superannuation funds and private equity groups
took Sydney Airport private in February-
funds will also face greater demand for liquidity as
members age and begin to draw down their
nest eggs, Bradley adds.
A raft of legislation has been introduced over the
past several years to increase transparency
and improve governance in the industry. Among
them, the Your Future, Your Super reforms
introduced a performance test that will apply to
multisector choice funds.
Reynolds says that legislation should carefully
balance member interests against the
innovation typical of investment strategies at
industry funds. While Reynolds welcomes greater
transparency, she hopes reforms don't simply
encourage all super funds to hug a benchmark for
fear of being an outlier.
With trillions sitting in superannuation funds,
governments have been tempted to raid
the amassed savings for short-term solutions. The
government of former Prime Minister Scott
Morrison had early access to superannuation
schemes during the coronavirus pandemic,
and Australians withdrew around $42 billion from
supers, according to Treasury data.
Reynolds and Bradley would like to see the
" purpose of super " enshrined in legislation as the
superannuation guarantee was three decades
ago. For Reynolds, this would ensure clarity around
its objectives. " I would hope that subsequent
governments can't come in and use super to fix
short-term problems, " Reynolds says.
Indeed, safeguarding the purpose of
superannuation-investing on behalf of members
for the long term-will ensure our world-class
superannuation industry will continue to
meet the needs of future generations just like
the workers in Derrimut.
Christine St Anne is communications manager at
Morningstar Australia. Her 2012 book A Super History
chronicled the multidecade evolution of the
superannuation industry.
which could lighten the effect of slowdown
in emerging Asia. "
Matt Wacher, chief investment officer
for Asia-Pacific at Morningstar Investment
Management, sees value in betting on a
turnaround of China technology. Sydney-based
Wacher finds the sector attractive because
of the valuations and the margin of safety
available there after deep corrections over the
past couple of years.
" There's a reasonable position of China tech in our
portfolio, " he says. " And as some of the
regulatory risk abates, we would probably add
to that position. "
Is China an Inflation
Hedge?
ASIA
China
Red-hot inflation and successive interest-rate
hikes from the U.S. Federal Reserve have
weighed heavily on the capital markets. Keiko
Kondo, head of Asia multi-asset investments
at Schroders, uses a model that suggests a
higher-than-average chance of the U.S. economy
ending up in a recession.
A spillover of recessionary risk from the U.S. and
Europe to the rest of the world seems
inevitable. Some of the Asian economies that
could be more susceptible to these risks are
trade-heavy South Korea and Taiwan. However,
portfolio managers believe a large part of
Asia stands to be in better shape.
When looking at the broader Asian economy,
Thomas Poullaouec, head of Asia-Pacific
multi-asset solutions at T. Rowe Price, factors
in a bigger share of China influence.
" Asia is very sensitive to China, where we are
not talking about rate hikes but a further
policy loosening and support, " he says. " The
country is likely to be one of the first global
economies to reaccelerate from that downturn,
morningstar.com/products/magazine
29
At this point, the only thing stopping him
from adding to his positions in China tech is
the uncertainty around the changes to
regulations, both domestically and from abroad.
For example, U.S. regulators are after
the noncompliant Chinese ADR listings on
U.S. exchanges.
Wacher says, " If we were to get clarity on more
of those things, we would certainly see the
sector as a good opportunity. The likes of Alibaba
BABA and Tencent TCEHY are very focused
on China. We see those stocks as quite insulated
from a U.S. recession. "
Kondo, who manages Hong Kong-based
Bronze-rated Schroder China Asset Income fund
and Neutral-rated Asian Asset Income Fund,
thinks China is one market in the world
where Schroders won't shy away from owning
more growth stocks. The reasons behind a stock
market correction in China were not directly
tied to higher interest rates in the U.S., but policy
initiatives. While volatility may persist, Kondo
thinks growth stocks in the offshore China space
will see a much bigger upside potential.
Kate Lin is a data journalist for Morningstar Asia.
https://www.morningstar.com/authors/1680/christine-st-anne https://www.morningstar.com/stocks/xnys/baba/quote https://www.morningstar.com/stocks/xnys/baba/quote https://www.morningstar.com/stocks/pinx/tcehy/quote https://www.morningstar.hk/hk/author/3152/kate-lin-caia.aspx http://www.morningstar.com/products/magazine

Morningstar - Q3 2022

Table of Contents for the Digital Edition of Morningstar - Q3 2022

Contents
Morningstar - Q3 2022 - Cover1
Morningstar - Q3 2022 - Cover2
Morningstar - Q3 2022 - 1
Morningstar - Q3 2022 - 2
Morningstar - Q3 2022 - Contents
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Morningstar - Q3 2022 - Cover3
Morningstar - Q3 2022 - Cover4
Morningstar - Q3 2022 - S1
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Morningstar - Q3 2022 - S32
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