Financial Standard vol23n07 by financial.standard

Opinion: June Bei Liu, Ten Cap

Executive appts: Australian Ethical, Blue Owl, IFM Investors

Fake family offices emerge from shadows

Matthew Wai

Fake family offices are popping up all over the world, with loose definitions and limited regulation enabling misrepresentations to be made and leading to calls for processes to verify legitimacy.

Australia’s family office segment is maturing, employing as many as 20,000 people and managing about $140 billion in assets, according to KPMG. As such, it’s almost double the size it was 10 years ago.

“There has been significant continued wealth growth in Australia, through a strong property market, business success from globalisation and innovation, and the mining boom, creating a broad range of areas where people have materially grown their wealth,” Pitcher Partners partner Ben Lethborg says.

“This level of wealth in Australia probably wasn’t here 30 or 40 years ago when you compare that globally. And therefore, historically, the concept [of a family office] probably wasn’t as prevalent in Australia as it has been in European countries, the US, and maybe Asia, for a longer time span.”

As a result, the term ‘family office’ has become somewhat of a buzzword in the industry.

“That term seems to be being used more regularly for families that are significantly wealthy, that I may not necessarily call a family office, to seek inclusion into exclusive financial networks or investment opportunities,” Lethborg says.

“There’s a lot of families now who are just generally wealthy families, and I’m not saying you need to have an exact amount of dollars to become a family office. But when you compare families who are wealthy to a family that has an office which includes a broad range of strategic pillars - beyond investment and financial management, that is what I would call a family office.”

While accounting and financial advice firms are key pillars in the functioning of a family office, and while not ill-intended, they can often misrepresent themselves as a family office, he notes.

“The term ‘trusted adviser’ has been used in the finance industry for 20 years; it means a lot of different things to different people. Arguably, family office means a lot of different things to different people,” Lethborg says.

However, globally, the trend is not quite so innocent. Fake family offices are increasingly emerging, looking to take advantage of the title.

AYU chief executive Gus Morison explains that it isn’t necessarily an increase in fake family offices we’re seeing, but that those that exist are having a spotlight shone on them as consolidation forces the broader investment industry to enter new fields in search of mandates.

AYU is an international private members’ club that connects hedge funds, family offices, and alternative investment professionals through a platform. The organisation has a handful of Australian members and is eyeing an Australian expansion.

To combat the rising issue, AYU has established a family office accreditation program, which Morison describes as a “crowdsourced” method to verify a family office.

“Regulatory bodies cannot regulate private capital like they can a bank or a hedge fund, so it is up to the private market to do so,” Morison says.

“Almost everyone in this space has personal experience, if not evidence, of at least one fake family office; we simply facilitate the sharing of this information.”

So far, feedback has been “overwhelmingly positive,” he says – the only dissent has come from the fake family offices.

“We have also had a number of enquiries from businesses, organisations and governments around the world to use the program for their official purposes too, as it is offering a valuable complement to more binary fact checking that many rely on,” Morison adds.

“Genuine family offices welcome the checks. Fakes argue, very loudly.”

While the solution is welcome, Lethborg is confident the rise of fakes will remain less of an issue for Australia, noting that businesses here – even family offices – are typically governed by significant red tape.

“What’s within these family offices will be business interests that are governed by ASIC and reporting obligations to the Australian Taxation Office (ATO),” Lethborg adds.

“There’s recently been more focus from the ATO on family offices and succession planning, because of the intergenerational wealth transfer and the considerations that brings. I don’t think there is a need for further regulation or red tape, given the heavy level of regulation already in place in Australia.” fs

Feature: Superannuation 16

Opinion: Shawn Lee, SG Hiscock & Company

Coalition targets 30k advisers

Eliza Bavin

Shadow Treasurer Angus Taylor and Shadow Assistant Treasurer Luke Howarth announced a range of measures the Coalition would be looking to prioritise for the financial advice industry if elected on May 3.

Among these policies, Taylor and Howarth said the Coalition would make access to affordable financial advice a priority by setting an “ambitious target” to rebuild the advice industry to 30,000 advisers. The numerical target would also be embedded in ASIC’s Statement of Expectations and would serve as a guiding principle, ensuring financial advice regulation must be focused on reducing costs, building the industry and ensuring Australians have access to affordable advice. There are currently less than 16,000 financial advisers in Australia. Prior to the Royal Commission, at its peak, there was about 26,500. The Coalition said setting a target acknowledges the collapse in adviser numbers and replacement rate over the last decade.

Continued on page 4

CA ANZ launches AI certificate

Andrew McKean

Chartered Accountants Australia and New Zealand (CA ANZ) has launched an AI Fluency certificate to arm financial professionals with the skills to work with Generative AI.

CA ANZ group executive education and marketing Simon Hann said the certificate is designed specifically to help accounting and finance professionals stay competitive in rapidly evolving workplaces.

“The Certificate in AI Fluency exemplifies the dynamic professional development and training initiatives CA ANZ is creating to empower our members and finance professionals to embrace Gen AI. This critical technology is helping augment their key skills, including problem-solving, critical thinking, adaptive mindset, and ethical oversight,” Hann said.

Co-designer of the certificate, AI and technology expert Inbal Rodnay said developing AI literacy is “the single most impactful thing that any professional can do today” for their career,

Continued on page 4

Ben Lethborg Pitcher Partners

By Jamie Williamson jamie.williamson@

First Sentier to enter ETF market

Andrew McKean

First Sentier Investors is expecting to list its first exchange-traded fund (ETF) on the ASX in mid-May.

The listing of the First Sentier Geared Australian Share Fund Complex ETF (ASX: LEVR) will provide advisers and investors with listed access to an existing unlisted strategy that aims to deliver long-term growth by actively gearing selected ASX 100 companies that have strong balance sheets, growing cash flows, and liquidity.

First Sentier Investors head of Australian equities growth Dushko Bajic said the firm is pleased to bring LEVR to market, adding it would provide investors with flexibility to access the team’s active investment strategy via the ASX.

“Our experienced investment team has been actively managing the First Sentier Geared Australian Share Fund since its launch in 2023, growing funds under management to AU$155 million. LEVR will offer additional access to the Fund through an ASX quoted structure, for investors seeking to invest in an actively managed, geared portfolio of Australian shares,” Bajic said.

First Sentier Investors deputy head of Australian equities growth David Wilson, meanwhile, said that the team has over 25 years’ experience of gearing through both rapidly rising and falling markets.

“We believe the ASX 100 is the perfect hunting ground for an actively managed, geared strategy – even when markets are volatile – with a number of high-quality growing companies capable of compounding earnings growth and providing opportunities,” he said.

“By borrowing at a low institutional interest rate to invest, LEVR aims to compound the long-term growth of rising markets, offering the potential for amplified returns and franking credits. Given LEVR’s gearing levels, it’s a high to very highrisk fund with the potential for amplified losses in falling markets, but without the hassle of servicing margin calls.”

“That’s why we’re focused on high quality, liquid companies with conservatively geared balance sheets to help manage this risk.”

First Sentier Investors chief commercial officer Harry Moore concluded that given the increasing demand for ETFs, this additional way to access its active investment approach will expand the firm’s offering to new clients who mightn’t have traditionally considered investing via managed funds.

“We’re looking forward to listing LEVR, which provides clients the opportunity to access the expertise of our long-standing Australian Equities Growth Investment Team and one of Australia’s largest and longest-running geared share managers,” he said. fs

The quote ... market conditions are causing demand to rise for sophisticated, end-to-endtrustee and loan administration solutions.

01: Mark Pesco chief executive IQ-EQ

Global investor services group comes down under

Eliza Bavin

Global investor services firm IQ-EQ has entered the Australian market with the acquisition of AMAL Group – a provider of corporate trust, agency services and loan servicing.

The strategic acquisition of AMAL Group includes AMAL Asset Management, AMAL Corporate Holdings and their subsidiaries.

IQ-EQ is backed by Astorg, a pan-European private equity firm with more than $42 billion (€24 billion) of assets under management.

IQ-EQ said the acquisition supports its strategy to expand its global corporate trust and loan servicing business and enter key new growth markets.

The firm said it was drawn to the Australian market thanks to strong year-on-year double digit growth in the securitisation market driven by regional growth in the non-bank lender (non-ADIs) market.

“With superannuation assets projected for 2025 to total $4.1 trillion and $11.5 billion in alternative investment flows we’re witnessing a significant shift driven by increased allocations to alternative assets such as infrastructure, real estate, and private equity,” IQ-EQ said.

“As interest rates ease, private market fund managers are increasingly moving more into

this market, with high single digit growth expected across real assets, private credit and private equity. These market conditions are causing demand to rise for sophisticated, end-to-end trustee and loan administration solutions.”

IQ-EQ chief executive Mark Pesco 01 said the investment marks a significant milestone in the company’s global expansion strategy.

“The AMAL Group’s addressable market spans the four key reporting segments of trustees – securitisation, wholesale loans, funds, and managed investment trusts, each of which have unique market dynamics and client requirements,” Pesco said.

“As the only scaled end-to-end provider of trustee services and loan administration in Australia and New Zealand, this positions us to grow our corporate trust and loan administration business in synergy, cross-selling into our global client base and servicing our existing global clients amid growing demand for services in these new markets.”

AMAL Trustees chief executive Nick Procter said the acquisitions enable AMAL to better service its existing clients and offer new products and services to a wider variety of markets and strategies. fs

Hostplus limits investment options

Hostplus members with a Maritime Contributory Accumulation with a Protected Minimum Benefit (PMB) account will have their investment options limited.

Effective May 8, Hostplus will limit access to three investment options: Australian shares, international shares, and growth.

Additionally, changes will be made to the defined benefit reserve investment strategy, switching from bespoke investments to the Conservative Balanced investment option.

“[The changes] aim to provide greater certainty that the defined benefit reserve will be available for all members of this category into the future and therefore improve the long-term outcomes of all members in this category,” Hostplus said.

The super fund said the decision was made after a review into its investments with its independent actuary.

“The review found that continued access to the Australian Shares, International Shares, and Growth investment options could put pressure on the defined benefit reserve — the very reserve that helps ensure you receive your PMB, if eligible,” Hostplus said.

“Based on the actuary’s advice, the fund is taking responsible steps to safeguard this important safety net. By carefully limiting new investments into these three higher-risk options, we’re helping to protect the reserve and support its ability to deliver on its promise to members.

“This change is about making sure the fund can continue to deliver fair and secure outcomes — not just for today, but well into the future.”

Members who are already invested into one of the three options can remain there. fs

Coalition targets 30k advisers

Continued from page 1

Taylor said in times of economic uncertainty Australians need access to affordable financial advice to protect their hard-earned wealth.

“Labor has left Australia dangerously unprepared for future economic shocks, leaving Australians under-advised, under-insured, and under-banked,” Taylor said.

“A Coalition government will rebuild the advice industry and make it a more attractive profession by reducing red tape and compliance costs to bring the number of advisers back to a sustainable level.”

Howarth said financial professionals are trusted members of the community and need a government which respects and prioritises them.

“Financial advice reform has been an afterthought for the Albanese government and the botched rollout of the Compensation Scheme of Last Resort has been a costly disaster” Howarth said.

“Successive governments have piled on layers of new regulation and it is time for a new approach which reduces costs and supports the growth of the industry.”

The announcement was welcomed by the Financial Advice Association Australia (FAAA).

FAAA chief executive Sarah Abood said she was encouraged to see the commitment to reforming the Compensation Scheme of Last Resort (CSLR), giving advisers access to the ATO portal, reducing regulatory burden through DBFO and supporting new entrants to the profession.

“These are all important steps in addressing the challenges currently facing the sector. The profession has been clear: regulation in its current form is too often duplicative, inconsistent, and costly — for advisers and consumers alike. Thus, the proposed creation of a financial services deregulation taskforce is needed and welcome,” Abood said.

“We applaud the Coalition on its ambitious target of 30,000 advisers. A numerical target for rebuilding adviser numbers is a helpful signal of intent, though this must be matched by action that makes the profession more viable and attractive to new entrants.” fs

CA ANZ launches AI certificate

Continued from page 1 team, and business, calling the certificate “a perfect starting point.”

“We’ve worked to create learning materials that develop lasting, meaningful skills in what’s a rapidly evolving field. The course is practical, and the learning is immediately applicable, so people can confidently integrate AI into their ways of working and stay ahead of industry changes,” Rodnay said.

Fellow certificate co-designer, Deloitte chief edge officer Peter Williams said the certificate will equip finance professionals with strategic understanding and practical skills to apply AI through the lens of the consultancy firm’s professional and ethical standards.

“The 20-hour program incorporates four micro courses and two expert-led workshops to help participants identify opportunities and then effectively use Gen AI,” Williams said.

Enrolments for the certificate are now open and the course will commence in May. fs

01: Rose Kerlin chief member officer AustralianSuper

The quote

We’re in the process of contacting impacted members to work through what this means for them and provide support.

THREE LINE HEAD

Cybercriminals attack major superannuation funds

Andrew McKean

Cybercriminals attempted to breach the systems of several superannuation funds at the start of the month. Although most attacks were repelled, thousands were affected.

Rest said fewer than 1% of its members were affected by unauthorised activity on its online Member Access portal. Reports suggest the incident may have compromised the details of up to 8000 members.

A statement from Rest chief executive Vicki Doyle said the fund responded immediately by shutting down the member access portal, undertaking investigations, and launching its cyber security incident response protocol.

Nevertheless, she said this will be “very concerning” for impacted members, adding the fund is “very sorry this has happened.”

“We’re in the process of contacting impacted members to work through what this means for them and provide support. No member funds were transferred out of impacted members’ accounts due to these unauthorised access attempts,” she said.

Rest said some members may have had limited personal information accessed and that it will continue to update affected individuals and assist them with taking further steps to protect their accounts.

AustralianSuper also confirmed it saw a spike in suspicious activity across its member portal and mobile app.

AustralianSuper chief member officer Rose Kerlin 01 said the fund has identified that cybercriminals may have used up to 600 members’ stolen passwords to login into their accounts in attempts to commit fraud.

“While we took immediate action to lock these accounts and let those members know, there are things members can do right now to protect themselves online. We are highlighting this event to make sure members are alert and take all possible precautions to protect their retirement savings,” she said.

At the time, it was understood that four AustralianSuper members had lost a combined $500,000 as a result of the attacks. A week later, the figures were updated to 10 members and $750,000 lost.

Australian Retirement Trust (ART), the second largest superannuation fund in Australia, also confirmed that its digital security system identified unusual login activity and that impacted accounts were locked as a precaution.

A spokesperson said the fund hasn’t identified any suspicious transactions or modifications regarding these accounts.

Financial Standard contacted ART to confirm the number of affected accounts, however, the fund didn’t provide a response.

Insignia Financial, meanwhile, said it de-

tected suspicious activity involving an unusual number of login attempts targeted at its Expand Wrap Platform.

MLC Expand chief executive Liz McCarthy said suspicious activity has been detected on around 100 Expand Wrap Platform customers’ accounts, adding that there’s been no financial impact at this stage.

Hostplus, which was also attacked, acknowledged the situation may be concerning to some members.

“We’re actively investigating the situation to determine the facts and the extent of any impact to Hostplus. Whilst the investigation remains ongoing, we can confirm that no Hostplus member losses have occurred,” a spokesperson said.

“Our top priority is the security and privacy of our members and their accounts, and we’re taking all necessary measures to protect our systems and data.”

Hostplus said it will provide further information as it becomes available.

Some large superannuation funds appear to have avoided the impact from the broader cybersecurity incident.

AMP said it was aware of the incident affecting several funds and that it was monitoring developments closely. So far, it added that, there’s no evidence of any breach or unauthorised activity on its systems.

“We’ll continue to closely look at all activity across our systems through our 24/7 monitoring capabilities and remain vigilant,” a spokesperson said.

Initially, Cbus said there was no evidence its members were impacted. However, some days later it confirmed it had been.

“We’re constantly monitoring for threats to ensure our defensive controls are effective for our members,” a spokesperson said.

The fund reported to APRA an “unusually high spike in log-in attempts”, impacting around 85 member accounts, which occurred several days after the cyberattack that impacted other super funds.

“At this stage of our inquiries, there is no evidence that any financial losses have occurred for Cbus members,” the fund said.

“Out of an abundance of caution, the fund is investigating a small number of accounts that may have been impacted including accounts where multi-factor authentication was triggered in the hours before and after the spike event. These accounts were pro-actively deactivated, and the members are being contacted.”

The fund also noted that the spike in log-in attempts coincided with “significant market volatility potentially causing increased member engagement.” fs

AMP shareholders approve pay

Karren Vergara

AMP shareholders overwhelmingly approved the 2025 remuneration and chief executive Alexis George’s long-term incentives after the company rejigged its remuneration framework.

Shareholders voted in favour of adopting the remuneration report at 93.2%, while George’s long-term incentives for 2025 passed at 96.6%.

In 2023, AMP copped a first strike on its remuneration report following disgruntled shareholder feedback. George was slated to be awarded performance rights tied to company shares as part of her long-term incentive, which is equivalent to 100% of her fixed salary of $1.7 million.

In 2024, AMP avoided a second strike with George’s remuneration report passing at 91.8%.

Also, that year, the remuneration committee conducted an external review of market remuneration for the financial services sector.

AMP chair Mike Hirst said: “As a result, the committee agreed that it was appropriate to reduce the maximum short-term incentive for the chief executive and executive team from 200% of fixed remuneration, to 150% from 1 January 2025. This reflects our simplified business and current market practice.”

Hirst said the board also took the decision to update the 2025 company scorecard to ensure it is aligned to AMP’s growth strategy.

“Therefore, we have changed one of the scorecard metrics by replacing statutory net profit after tax with cost to income. This is a more relevant metric as the business pivots to growth, where being an efficient and effective provider of financial services will best help optimise AMP’s opportunities,” he said. fs

GESB expands leadership team

GESB added a former HESTA executive as its chief member experience officer, while also welcoming a chief corporate services officer.

GESB recently welcomed Kelly Smith to the role of chief member experience officer.

She previously worked at HESTA as general manager of operations, insurance and customer experience for three years. More recently, she served as a strategic enablement consulting partner to the fund.

At GESB, Smith is responsible for member and employer experience, while also ensuring value for money super and retirement products. She will oversee brand, communications and digital, insurance, key account management, member insights and analytics, product, and fund administration, the fund said.

Meantime, the fund also welcomed Anthony Cribb as chief corporate services officer.

He was previously in corporate affairs and governance for the Pilbara Ports Authority. He also worked for the Australian Gas Infrastructure Group as general manager of corporate services, general counsel and company secretary.

Cribb oversees legal, secretariat and governance functions, information security, records and data management, risk and compliance, IT services, and people and culture. fs

Future Group positions super offerings for growth

Jamie Williamson

As part of Future Group’s broader plans to scale, Future Super and Verve Super are set to be merged into the Smart Future Trust, giving members of each a completely new menu of investment options for less.

From May 23, the Future Super Fund, including the Verve Super sub-plan, will be moved into a standalone division of the Smart Future Trust by way of a successor fund transfer.

Over time we look forward to providing even more on the Future Super and Verve Super platforms as we respond to members interests.

The Future Super and Verve Super brands will remain, and they will continue to invest in the same way, with the existing approaches to screening and impact investing to remain as is.

However, members of both offerings will benefit from the advantages of scale the move offers, seeing an immediate administration fee reduction and access to an enhanced range of investment options. They will also now have access to intra-fund financial advice.

“Bringing together our back-office investment structures will allow us to pass on the benefits of scale to our members. We’re delivering more value for members by cutting fees, providing a wider range of investment options and offering access to financial coaching,” Future Group chief executive Simon Sheikh 01 told Financial Standard

“Members will continue to benefit from investments that match their values with the Future Super and Verve Super products operating as part of a standalone division within the fund.”

Upon transfer, the existing investment options for both Future Super and Verve Super will be closed. Members’ investments will then be appropriately mapped to six new investment options.

For Future Super accumulation members, the new options are Sustainable Moderate, Sustainable Balanced Growth, Sustainable

Growth, Sustainable High Growth, and Sustainable Alternatives Growth. There will also be a Balanced option, but this will be closed to new members from May 24.

As an example, a Future Super member with $50,000 currently invested in the Balanced Impact option will have 85% of their balance placed in Sustainable Balanced Growth and 15% in Sustainable Moderate. Overall, they will go from paying $781.50 a year for the product to $687.43.

Verve members – who can currently only invest in a single option – will also have access to the Sustainable Moderate, Sustainable Balanced Growth, Sustainable Growth, Sustainable High Growth, and Sustainable Alternatives Growth options, but will also be able to invest in a dedicated Gender Equity Australian Shares strategy. A Verve member with $50,000 invested in the Balanced option will have their balance evenly split across the Sustainable Moderate and the Gender Equity Australian Shares options, saving them about $25 a year in the process. Under Verve’s new parents policies, they could save even more if they’ve been off work or worked for less than 10 hours a week while caring for a new child as they can request a full or part refund of the annual admin fee.

Sheikh added: “Over time we look forward to providing even more on the Future Super and Verve Super platforms as we respond to members interests.”

As at December 2024, Future Super held about $2.46 billion in funds under management on behalf of 58,542 members. Verve Super has about $270 million in assets and close to 7000 members. Meantime, the Smart Future Trust, which was known as Smart Monday before Future Group acquired it from Aon, is home to just over 60,000 members and about $6 billion. fs

Perpetual to build digital wholesale term deposit marketplace

Perpetual Corporate Trust will begin operating a digital marketplace offering debt instruments, kicking off with wholesale term deposits.

The Corporate Trust business has been granted a market license in Australia enabling it develop a fully electronic, self-directed SaaS platform for debt instruments, which will initially focus on facilitating wholesale term deposits between authorised deposit-taking institutions, institutional investors, and wealth managers.

“The banking and financial services market is experiencing strong growth, with increasing demand for direct investment in secure, low-risk, income producing assets such as wholesale term deposits and fixed income,” Perpetual Corporate Trust chief executive Richard McCarthy said.

“With limited digital trading options currently available,

our platform brings greater efficiency, competition, and transparency to the market.

“The license will allow us to enable the wholesale term deposit market to operate more effectively, efficiently and economically, while managing cyber security and maintaining compliance.”

Perpetual Corporate Trust said it is looking to streamline and modernise the execution of these instruments, much like it has previously done with investor reporting, regulatory reporting, structured finance and fixed income markets, by “eliminating inefficiencies and enhancing accessibility for issuers, investors, and intermediaries.”

Perpetual Corporate Trust was due to be acquired by KKR, however the deal was called off in February after the tax implications ensured it was no longer feasible. KKR insists the break fee is still owed – a claim rejected by Perpetual. fs

01: Simon Sheikh chief executive Future Group

The quote

WTL merges three advice firms

Karren Vergara

WT Financial Group (WTL) is consolidating three financial advice practices – Titan Financial Planning, Darwin Financial Services and Wealth Connect Financial Services – after announcing its joint venture with Merchant Wealth Partners this week.

The joint venture known as “Investco” will inject an initial $3.5 million into the newly formed national group called “Hubco” in return for a 36% equity stake.

The capital will be used to pay down debt, support business growth, and allow the founding principals to realise some of their equity, the announcement from WTL said. Hubco is expected to be debt-free post-transaction.

Founders will also receive a mix of cash and shares in the new entity. ASX-listed WTL will take a 6% stake for its role in advisory and due diligence.

WTL chief executive Keith Cullen has been appointed managing director of Investco. Titan principal David McLean is the incoming chief executive of Hubco and will lead its integration and expansion. Merchant Wealth partner David Haintz will serve as executive director.

Darwin Financial Services managing director Andrew Moo and Wealth Connect Financial Services principal Jeff Stella also join the leadership team.

Cullen said Hubco’s blueprint is designed to attract other advisory businesses seeking growth without giving up local identity, as well as share operational support and strategic capital to create a platform for future tuck-in acquisitions across Australia.

“The capital and strategic resources provided by Investco will help drive expansion while preserving each practice’s entrepreneurial flair,” Cullen said.

McLean said: “We’re bringing together three likeminded teams with shared values. Hubco will give us better systems, stronger support for our advisers and clients, and a springboard for growth.” fs

Adviser exam pass rate declines

Matthew Wai

ASIC has released the results of the 28th Financial Adviser Exam, held on March 6.

Of the 241 candidates to sit the exam, 177 passed, representing 73.4% of the cohort.

Of those 241 candidates, 175 (72.6%) sat the exam for the first time.

The pass rate has declined from the previous sitting, where 77% passed in November with 289 participants.

The passing of the exam is required before an adviser initiates the third quarter of their professional year and they also need to be authorised by an Australian financial services licensee as a provisional financial adviser.

To date, 21,812 individual candidates have sat the exam and over 20,237 (92%) of candidates have passed, ASIC said.

Those who have been unsuccessful at the exam will receive general feedback from ACER on the areas they underperformed.

The 29th sitting of the exam will be held on June 5. fs

01: Daminda Kumara head of security, compliance and service delivery Commonwealth Super Corporation

The super fund scouring the dark web to protect members

Andrew McKean

Acompromised identity could result in financial harm, including the loss of superannuation savings, a particularly prominent risk given the volume of members’ personal data available for sale. Commonwealth Superannuation Corporation (CSC) is fighting back with a novel approach.

The dark web market is booming, tipped to reach US$1.3 billion by 2028. On it, identity kits that include passports, bank logins, and access to social media accounts are being sold at a low cost.

For us, it’s not just about managing super; we’re also focused on looking after our customers safety and wellbeing in the digital world.

CSC is digging through the dark web to identify potential breaches involving its members –many of whom are “sensitive” personnel in the government and Australian defence force – and is contacting affected individuals to let them know what data is out there and what actions they need to take.

CSC head of security, compliance and service delivery Daminda Kumara 01 told Financial Standard that the dark web data spike took off after the pandemic, likely due to greater technology reliance by organisations, which criminals were quick to exploit.

While not a unique problem to superannuation, Kumara mooted that the industry may have drawn more attention from cybercriminals over the past year because of the reports spruiking the success and scale of Australia’s $4 trillion retirement savings pool.

The large volume of articles touting the size and success of the superannuation industry could attract untoward attention. Although the sector takes pride in its achievements, from a practitioner’s perspective, it may be more prudent to maintain a lower profile.

CSC began strengthening its cybersecurity

posture several years ago, increasing its investment while also developing a strategy and roadmap to drive organisational maturity.

As part of that process, the fund implemented a requirement to proactively monitor and measure whether employee data appeared in public repositories, including the dark web.

However, the fund’s analysis revealed that much of the data being flagged wasn’t related to internal staff, but instead related to member information. And so, recognising its broader applicability, it extended this capability to members, framing it as an additional service.

“When we started discovering member information… we started questioning if customer information was exposed as a result of their own systems – not through CSC. As [security] practitioners, we thought we’ve got some data, someone has an issue, and it’s our responsibility to tell them because they’re our customers,” Kumara said.

“For us, it’s not just about managing super; we’re also focused on looking after our customers safety and wellbeing in the digital world. We proactively decided to reach out to these customers through our contact centre staff and say, ‘Hey, we’ve seen something…’

On average, the fund detects over 100 cases a year and has found that members typically respond positively to the proactive outreach, appreciating the effort to inform them.

“While the superannuation sector has seen increasing cyber activity, threat intelligence experts caution that the industry’s profile could rapidly rise among cybercriminals. The sheer volume of financial data held by these funds makes them an inherently attractive target, and any perceived vulnerability could trigger a surge in attacks,” Kumara said. fs

Three AFS licensees pinged over breaches

Three AFS licensees – Australian Advice Network, IA Advice, and Sherrin Partners Services – have copped infringement notices from ASIC after their financial advisers provided personal advice while unregistered. Each licensee paid a $31,300 penalty in March.

The corporate regulator said it had “reasonable grounds” to believe the AFS licensees authorised a financial adviser, who gave personal advice to a retail client in relation to “relevant financial products” without being registered.

ASIC said registration requirements are an “important consumer protection” because it confirms AFS licensees have assessed whether their advisers are “fit and proper,” and that they meet the applicable education and training standards.

“Failure to register a financial adviser creates a risk for consumers,” the regulator said.

The regulator added that a failure to register financial advisers may also indicate that licensees lack adequate governance arrangements to ensure compliance with the law.

ASIC noted each penalised licensee promptly registered their adviser and reported the breach after becoming aware the individual was unregistered.

The regulator said it took these circumstances into account when determining its enforcement approach, which may explain why the $31,300 penalty is half the $62,200 maximum a court can impose for each contravention.

The registration requirement has applied since February 16. It requires a relevant provider to be both authorised by an AFS licensee and registered with ASIC before providing personal advice to retail clients. A relevant provider includes a financial services licensee, an authorised representative, or an individual employed by or acting as a director of a financials services licensee who’s authorised to provide such advice.

ASIC said it’s been actively monitoring compliance with the registration requirement for financial advisers and working to raise awareness with licensees and relevant providers. fs

The quote

RBA flags risks to super system

Eliza Bavin

The Reserve Bank of Australia (RBA) has said the superannuation sector being derailed by liquidity challenged could pose a threat to the country’s financial stability.

In the RBA’s April Financial Stability Review, the bank said while super funds are mostly still benefitting from a steady net inflow of liquidity from members, their significant participation in key financial markets means there is some risk to financial stability.

“…liquidity challenges for the broader financial system could arise in the event of large shocks to the superannuation sector; for example, where an unexpected policy change allowing for early withdrawal of superannuation balances occurred alongside capital calls on private asset commitments and a large, sustained decline in the Australian dollar drained liquidity through payments related to foreign exchange hedges,” the RBA said.

Still, the RBA said historically the sector has displayed a high level of resilience and tended to support financial stability.

“While the sector supports long-term capital formation in Australia and has previously been a supplier of liquidity to the system in periods of financial stress, the growth and size of the sector now introduces the potential for it to amplify stress if several extreme-but-plausible liquidity risks materialised simultaneously,” it said.

“It is also exposed to the risk of operational disruptions. Continued strengthening of superannuation funds’ governance and liquidity and operational risk management practices is therefore an area of ongoing focus of regulators.” fs

Hejaz receives $182m injection

Hejaz has scored $181.8 million (€100m) in funding from an unnamed UAE-based private wealth group.

The Islamic financial services provider seeks to scale its Sharia-compliant offerings with the cash injection in property, auto, commercial and development loans.

Hejaz chief executive Hakan Ozyon said the facility marks a significant leap forward for Islamic finance in Australia, ensuring that the country’s expanding Muslim communities have greater access to financial solutions that align with their values.

“This funding facility allows us to meet this demand at scale, supporting home buyers, business owners, and developers while ensuring access to responsible finance solutions,” he said.

“The demand for Sharia-compliant financial products in Australia has surged, driven by a growing population seeking alternatives to conventional finance,” said Ozyon.

“Hejaz’s expanded capacity to deploy this capital will not only benefit the Muslim community but also contribute to broader economic activity, job creation, and infrastructure development across Australia. This partnership with global investors highlights the increasing recognition of Australia as an emerging hub for Islamic financial services and reinforces Hejaz’s leadership in this growing sector.” fs

01: Nick Hamilton chief executive and managing director Challenger

TAL takes 15% stake in Challenger

Karren Vergara

MS&AD Insurance Group Holdings has sold its entire 15.1% stake in Challenger to TAL.

TAL, together with its parent company Daiichi Life Holdings, acquired the minority interest at $8.46 per share – marking a 53% premium to Challenger’s closing share price of $5.54 on April 4.

We welcome their significant investment in our business and will explore future opportunities that support our strategic objectives.

MS&AD follows in the footsteps of Apollo Global Management, which slashed its shareholding in Challenger from 20.1% to 9.9% in September 2024, subsequently making MS&AD the ASX-listed firm’s largest shareholder until today.

The union between MS&AD and Challenger began with subsidiary MS Primary in 2016.

Challenger Life initially partnered with MS Primary to reinsure AUD-denominated annuities, which eventually expanded into USDdenominated annuities from 2019 and YENdenominated annuities from November 2023.

As announced in May 2024, the partnership was extended for MS Primary to provide Challenger Life an annual amount of reinsurance of at least ¥50 billion per year ($490m) for the next five years.

Challenger managing director and chief executive Nick Hamilton 01 said that “Challenger and MS Primary have successfully collaborated over the last decade and this partnership will not be impacted by the share sale.”

Following TAL completing the takeover of the stake, Masahiko Kobayashi will step down as MS&AD’s representative on the Challenger board.

The transaction is subject to approvals from APRA and the Australian Foreign Investment Review Board (FIRB).

Hamilton said: “Dai-ichi Life is a global leader in life insurance and we look forward to building a relationship that will benefit both our customers and shareholders. We welcome their significant investment in our business and will explore future opportunities that support our strategic objectives.”

TAL chief executive Fiona Macgregor commented said: “There is an important community need to address with five million Australians currently in or preparing for retirement. Our minority investment in Challenger is an extension of our commitment to supporting Australians’ financial needs during retirement.” fs

ASIC asks for input on RS, IDR dashboards

Jamie Williamson

The corporate regulator plans to introduce two interactive dashboards that would track firm-level reportable situations and internal dispute resolution (IDR) data to push financial firms to lift their game.

ASIC is consulting on plans to publish dashboards containing firm-level reportable situations and IDR data later this year.

The regulator said doing so would support the regimes by enhancing transparency and accountability to encourage improved behaviour and increase confidence in the financial system, while also highlighting areas of concentration of significant breaches and complaints and enabling firms to target improvements across the board.

“Publishing reportable situations and IDR data will encourage firms to lift their game. It also provides consumers and investors access to this data at firm level, further encouraging confident and informed participation in the financial system,” commissioner Alan Kirkland said.

The reportable situations data published would include significant breaches of core obligations and situations where the licensee is no longer able to comply with a core obligation and the breach is likely to be significant. The other dashboard would publish all IDR data submissions, including reports of no complaints in a period.

Firms would be named and their AFSL number published alongside them, but individual licensees’ names and AFSL numbers would not.

The reportable situations data would be published annually, while the IDR data will come out biannually. It will all be accompanied by explanatory notes and contextual statements to assist in consumers’ interpretation of the data.

In December, ASIC published the inaugural IDR data report, flagging concerns that firms were not reporting correctly.

In advice, service-related issues were overwhelmingly the top complaint, accounting for three times more complaints than the second most common issue.

Interestingly, the report revealed that the top three outcomes for investments and advice complaints were no remedy, or apology or explanation only (49%), service-based remedy (43%), and monetary remedy (7%).

In FY24, financial firms reported 72,238 complaints relating to investments and advice and around 63% were resolved on the same day, three-quarters were resolved within four days, and almost all complaints (99%) were resolved within 46 days.

In terms of superannuation complaints, firms reported 220,860 with around 54% of those being resolved on the same day and more than $15 million was paid to complainants as a remedy.

The top three products for superannuation complaints were superannuation account (73%), pension (11%), and death benefit (5%). The top three issues were service-related issues (26%), delay in following instructions (12%), and technical problems (10%).

Also in December, ASIC said licensees have some way to go in complying with the reportable situations regime.

Reviewing the compliance arrangements of 14 licensees that had few or no situations reported between October 2021 and June 2024, ASIC found licensees were generally slow to report to ASIC because they were slow to identify breaches and commence investigations. It also found deficiencies in licensees’ incident management, namely how they identified, escalated, and recorded incidents. fs

The quote

01: Jun Bei Liu founder and lead portfolio manager Ten Cap

There is more to investing than tariffs and trade

The thing about being an equity investor is that sometimes macroeconomic forces work in your favour but when they do not, you still have bottom-up stock specifics to guide your investment decisions. This is how the current investment backdrop appears.

For a long time, the macro has been a favourable tailwind for equities. A period of solid growth, falling inflation and modest declines in global policy rates supported elevated equity market valuations, strong equity inflows and momentum investing. But the cyclical backdrop has unravelled over the past two months with macro tailwinds no longer working in tandem with micro attraction.

In fact, the 10% correction across most major equity markets has been a brutal reminder that even the best companies and/or markets can become over-owned, overpriced and overhyped. For instance, the Mag-7 stocks and the S&P500 are down 21% and 9% respectively from 52-week highs in comparison to the Eurozone which is down only 3%. But few would argue that the Mag-7 and US equities are not the quality / growth plays over Eurozone equities which are cyclical / value.

While Australia has fared better on a relative basis with the ASX200 down only 8%, this comes at the expense of the dramatic upside seen in more growth centric stocks and equity markets prior to the sell-off. Importantly, performance over the past two months is a pertinent reminder that while momentum, flows and hype can push companies away from fair-value for long periods of time, owning good companies at the right price should al-

ways be core to a successful, through the cycle, investment strategy.

We think the macroeconomic outlook is at a crossroads. We have already seen a softening in the outlook due to trade-related uncertainty but where it goes from here will depend on how this evolves. On the one hand we could see no further material increase in tariffs and trade uncertainty with the step down in US growth temporary and modest. On the other hand, we could see a wave of retaliatory tariffs with the economic growth outlook deteriorating even further.

The problem is that choosing the right path requires confidence in one outcome over the other and this remains difficult to predict. We hope good sense prevails and that a full-blown global trade war and US recession can be avoided. But, while we know President Trump is promarket, we also know that resetting the global trade backdrop is a priority but, in our view, not at any cost. Similarly, while the Federal Reserve put is in play for risk assets, it would require a deterioration in the labour market which would drive more near-term equity pain.

Knowing that there is more than one possible macroeconomic outcome, we think it’s better to position in companies that have an appealing outlook regardless of the economic path forward.

Yes, this could be thought of as having a foot in both defensive and cyclical camps (an on the fence stance) but valuation rather than economic exposure is the most important variable in stock selection when there remains a great deal of macroeconomic uncertainty and where it’s unlikely that central banks, including the Reserve Bank of Australia (RBA), are likely to ride to the rescue.

The quote

... we urge investors to use periods of weakness to add to equity exposure. Trump is not forever, and neither are recessions.

For domestic investors, we think the equity market outlook is a little more nuanced given economic and interest rate cycles are desynchronised with the US and many other developed economies. While Australia will be dragged down by further US led growth weakness, the economy has been bouncing around lows for some time and policy rates have only just started to fall, potentially offering some downside cushion if the RBA was to accelerate rate cuts. In addition, Australia runs a trade deficit with the US, in turn removing it from the cross hairs of US trade policy.

We think the market is likely to remain volatile while the economic and interest rate path firms up, but against this backdrop we think there are several investment guidelines that should remain in focus.

First, we urge investors to use periods of weakness to add to equity exposure. Trump is not forever, and neither are recessions. Major drawdowns are regular occurrences and while they are painful, the absence of structural imbalances should mean that markets do bounce back once risks have passed.

Second, valuations matter again. Whether you are raising exposure to defensive stocks or cyclicals, the cushion against further disappointment is buying stock at the right price. In fact, we think “price” is more important than the degree of economic sensitivity under all outcomes except recession. For example, Australian technology stocks, which have a strong structural growth element, have fallen 24% from peak versus Australian industrials, which are highly cyclical, but have only fallen 5%. In other words, valuation matters a great deal when uncertainty and volatility is high.

Third, the path for interest rates is lower. Either the world and Australian hangs together and rates fall modestly, or growth capitulates, and they fall more meaningful. Either way, this is likely to provide some relief to rate sensitive areas of the equity market even if it doesn’t appear to be the case. After the “panic” we think lower rates will underpin areas such as residential property as well as office that was already showing signs of turning around.

Putting this together, it is always hard to be positive during violent price moves and when the direction of equity markets is down. But the current sell-off was long overdue and like other correction periods, it will pass. For Australia, the economic outlook should gradually get better with support from the RBA. President Trump and trade ructions are not forever but

and owning good quality stocks at the right entry points, should be.

Figure 1. Market correction in year to March

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Executive appointments

IFM Investors names operations chief

IFM Investors has appointed Amy Diab 01 as its chief operating officer, following a six-month global search.

Diab has been acting chief operating officer since October last year, after the firm lost her predecessor Lounarda David, a former chief investment operations officer at Sunsuper, who is now working as an independent consultant.

Before stepping into the acting role, Diab served as global head of investment operations since 2018. Her career prior to IFM included more than 15 years at Citi Securities Services and NAB Asset Servicing, where she worked across operations, operating model design, client solutions, and sales.

IFM chief executive David Neal said Diab’s experience working with global firms will be “incredibly valuable” as the firm continues executing its growth strategy for its clients.

“... Amy has been a driving force in fostering innovation, improving efficiencies, and strengthening collaboration across our teams, and I’m confident that she’ll continue to lead us towards even greater success,” Neal said.

ESG

expert joins Australian Ethical

The find has hired Dan Simpson as a sustainable and impact specialist and the link between the business’ investment, distribution and communication teams.

In the new role, the recruit is the conduit between the investment and client teams, to help articulate Australian Ethical’s investment philosophy, process, strategy and purpose.

Simpson has over 20 years of experience working in the investment industry, in New Zealand, Hong Kong, the UK, Germany and Australia.

His career includes five years at ANZ Private Bank where he established an impact investment business.

As head of portfolio management at the lender, Simpson managed a suite of diversified investment funds and an impact investment platform for wholesale and institutional clients.

Michael Dwyer embraces HOPE HOPE Housing has welcomed industry veteran Michael Dwyer02 as its inaugural chairperson reflecting the impact fund’s growing maturity and track record.

Dwyer has served as an advisor to HOPE since the start of the fund that co-invests in home loans of essential workers like teachers, nurses and police.

The shared equity scheme co-invests up to 50 per cent of a mortgage so they can live close to work.

Dwyer has more than 30 years of experience in the superannuation and investment sectors. He was chief executive of First State Super (now Aware Super) for 14 years and was also general manager of the NSW industry super fund ASSET Super for 10 years.

He is a former director of the Association of Superannuation Funds of Australia, Bennelong Funds Management and a founding director of Fund Executive Association.

He currently chairs NSW TCorp and the MSquared Capital Advisory Committee.

Fitzpatricks adds product head

Andrew Chapple joins Fitzpatricks in the newly created role based in Sydney.

Chapple was most recently a consultant in wealth management, platforms, and superannuation and before that was a director of platforms at CFS.

He spent a total of 21 years at CFS working in senior roles, including product development and product management for the FirstChoice platform. Chapple also spent four years at Accenture as a senior manager.

Chapple will report to Fitzpatricks chief financial officer Cheryl Talbot. He is the second senior appointment announced in recent months, joining Debbie Jensen who was hired in the newly created role of head of marketing and client value proposition. She joined from Dexus where she was general manager of funds management marketing.

Pendal’s Blayney lands new gig

HESTA has made two new senior hires including a general manager of dynamic asset allocation and a general manager of information security.

Former Pendal Group’s head of multi-asset Michael Blayney03 will take on the former role with Nick Catherall landing the data security position.

Reporting to HESTA head of portfolio design Dianne Sandoval, the high-profile Blayney will lead the dynamic asset allocation team, which delivers the $93 billion super fund’s dynamic asset allocation investment strategy.

Blayney brings a wealth of experience to the $93 billion having previously served as the head of multi-asset at Pendal Group.

Roughly one year after acquiring Pendal, Perpetual merged the multi-asset team which marked the departure of Blayney as the portfolio manager of these funds.

The investment professional arrived at Pendal in August 2017 after holding senior roles with Aware Super, Perpetual and WTW.

American Century nabs sales lead American Century Investments has appointed a former director from Dimensional Funds Advisers to run sales in Australia.

Tom Fellowes 04 has taken on the role of vice president of Australia sales.

Based in Sydney, he will report to American Century’s head of Asia Pacific,Tom Clapham.

Fellowes is tasked with broadening American Century’s offering in Australia, which will soon include Avantis Investors.

In addition to serving as vice president of sales for American Century, he also holds the title of head of intermediary sales at its subsidiary, Avantis. Launched in 2019, Avantis offers a suite of actively managed ETFs in the US and Europe, in equity, fixed income and real asset solutions.

Fellowes has 20 years of experience in the funds management business, working at Dimensional for 18 years, most recently as vice president and regional director in the advisor services team.

Blue Owl completes local

team

Not quite nine months after PIMCO’s John Valtwies joined Blue Owl as a principal, Larry Francis has come on board from Bentham Asset Management, the global credit investment manager.

Francis has been appointed vice president and will work for Valtwies in Sydney as part of the firm’s private wealth build-out in Australia.

The recruit spent six years at Bentham in wholesale distribution, most recently as state manager for New South Wales and Queensland. Previously, he held business development roles at Clime Investment Management and Grant Thornton.

It is understood that while Blue Owl is still growing its private wealth team in Asia Pacific and Japan, the Sydney team is in place, and there will be no further hiring.

QIC bolsters sales leadership

Sydney-based Paul Raih has been promoted to head of Australia institutional distribution at Queensland’s sovereign wealth fund.

Reporting directly to Ravi Sriskandarajah, Paul will drive QIC’s continued success in the domestic market by growing new clients and capital and strengthening investor relationships.

Raih joined QIC’s private debt team two years ago as director of business development from Schroders, where he served as institutional sales manager.

Before his six years with Schroders, he spent 12 years with BlackRock as a member of the asset manager’s institutional client business group.

There, he was responsible for developing and maintaining relationships with Australian institutional clients and consultants.

Raih also brings experience with RBC Capital Markets. fs

01: Amy Diab

02: Michael Dwyer

03: Michael Blayney

04: Tom Fellowes

Flush with cash and bursting at the seams, superannuation funds want bigger business offshore. Are they finally shedding their home bias? And if so, is it at the expense of nation building? Karren Vergara writes.

At the inaugural Australian Superannuation International Summit held in February over four days during the blistering chill of the New York and Washington DC winter, the country’s biggest institutional investors rubbed shoulders with big wigs of American politics and business.

The likes of Trump cabinet members Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, as well as Wall Street’s finest such as Blackstone, BlackRock, Citi, Apollo and J.P. Morgan, were in attendance. As were Australia’s ambassador to the US Kevin Rudd, Macquarie chief executive Shemara Wikramanayake and TCorp chief executive David Deverall.

After talking to Wall Street chief executives, IFM Investors global head of external relations David Whiteley01, who attended the event, says there was a resounding sense of “amazement” at the pool of capital Australia’s been able to build over the last 30 years.

“They understand the benefits of a near universal, compulsory system where people’s savings are preserved until they retire. What that creates is a regularity, a reliability in terms of inflows, which can then be invested in the very long term,” Whiteley says.

“They look at some of the system designs, and more than one of them said, ‘this is the envy of the world’. When you’re hearing that from some of the most sophisticated finance leaders in the world, then that’s something Australia can be proud of and should be proud of.”

Australia’s pension system has exponentially grown in a relatively short period of time.

The Thinking Ahead Institute ranks Australia the fifth-largest pension market by asset size at the end of 2024 with US$2.6 trillion ($4.1tn).

The US pension system outpaces them all with US$38 trillion, followed by Japan, Canada and the UK, which have between US$3.1 trillion and US$3.3 trillion.

Not satisfied with its progress, the campaign backed by policymakers is sending a message to the world that the superannuation system is going full speed outside of its home base and to the next level.

Super funds’ representatives at the summit collectively invest about 30% of members savings in the US across all asset classes, Whiteley says. This equates to about US$400 billion invested by the largest super funds and is expected to grow to US$1 trillion by 2035.

“When we get to the late 2030s, the super system will likely be double the size of Australia’s GDP and inevitably, close to three quarters of workers’ retirement savings will be invested offshore,” Whiteley says.

“There’ll always be a home bias, and there are good reasons for that, including understanding markets, particularly around unlisted areas. But the reality is that the majority of people’s savings will be overseas.”

Rainmaker Information found super funds’ 38% ownership of the Australian equities market’s capitalisation has held steady since 2021.

While the nominal value of ASX shares owned though NFP funds increased 108% between 2013 to 2022, retail super funds’ ownership increased only 56%, the research said.

Another study by Morningstar drawing to the end of March 2024 shows that APRA-regulated super funds had $646 billion invested in the ASX alone. This was 24% of the ASX’s $2.7 trillion market capitalisation.

If diversification is the name of the game, then concentration risk and home bias are the antagonists.

Even ASIC chair Joe Longo recently acknowledged that the ASX has “topped out” for super funds and commended them for increasingly turning to alternative options.

Frontier Advisors director of consulting Kim Bowater 02 concedes that while Australia offers many good investment opportunities super will retain meaningful allocations to the country in portfolios. The world,

Feature | Superannuation

01: David Whiteley global head of external relations IFM Investors

however, offers different company, sector and economic-driver opportunities across asset classes.

“We’re not necessarily seeing super funds invest in new asset classes offshore but rather accessing some sub-sectors that are more established offshore. For instance, there are parts of the property market like healthcare, housing and logistics that are more developed offshore,” she says.

“The credit markets, while small are growing in Australia. It’s much more developed in the US and Europe. So, investors will naturally look at opportunities in Australia and how that compares with what’s available offshore, and what’s the right mix for the overall portfolio.”

The Thinking Ahead Institute names Australia (52%) and the US (50%) as having the biggest appetite for domestic equities over the past 10 years.

Bowater says super funds have a reasonable amount invested offshore and this has increased gradually over time and has been continuing.

“There is diversification from investing offshore, offering a greater breadth of opportunities, and deeper markets compared to Australia – including in the private equity, infrastructure, property, credit and listed markets, for example. We and the super funds more generally are looking for investment opportunities around the world and in Australia as well,” she says.

London, New York calling

The $360 billion AustralianSuper sparked a trend in 2016 when it became the first super fund to open a London office.

At the end of the 2024 financial year, AustralianSuper had 175 team members across London, Beijing and New York, the glut (121) of which are in the UK. The headcount is expected to quadruple over the next decade.

By 2030, the country’s largest super fund expects to manage more than 75% of its investments internally. It intends to invest $36 billion (£18bn) in these regions between now and 2030.

Aware Super, with $183 billion, opened its office in London in 2023 and committed $10 billion to investments in the UK and Europe. The team has grown to 18.

Last April, the $310 billion Australian Retirement Trust (ART) announced it also set up in London.

The fund has spread 40% of its assets outside of Australia, some $25 billion alone is in the UK and Europe.

“Over the past year, our team has worked on our existing investments, and we’ve also explored an increasing number of international investment opportunities which can deliver strong returns, and having staff based out of London has supported this goal,” ART said in a statement.

“Being close to our external investment managers in the UK and Europe has enabled us to secure compelling opportunities, and we have kept

02: Kim Bowater director of consulting Frontier Advisors

US$1tn

How much super funds will have invested in the US by 2035.

our team small given the success we’ve had working closely with our partners on the ground.”

ART did not confirm how many people are posted in its London office but said that the team is focused on its existing investments, including Heathrow Airport, BoCo Living, the Arlanda Express and others, while hunting new unlisted investment opportunities for members.

Sonas Wealth SMSF specialist adviser Liam Shorte 03 says super funds don’t have many options but to invest overseas.

“In terms of fund size and even the money that’s coming in weekly, super funds would move the Australian stock market every day. So, they have to go overseas,” he says.

Shorte anticipates that like AustralianSuper, other super funds will investigate investments and conduct due diligence on the ground themselves rather than use third parties to do so.

“Super funds have got no choice. The Australian market is too small, and they’ve got to look overseas. This has already paid off over the last 10 to 15 years,” Shorte notes.

“We might find the smaller ones’ group together if they’re not big enough to have their

by 37bps, he writes in a note, adding that the growth of their global equities portfolios, both in absolute size and as a percentage of total invested assets, is “eminently sensible as their AUM outgrows the domestic market.”

Wider investment opportunities and better liquidity makes the US an appealing market to super funds, offering diverse opportunities, lower trading costs and in certain sectors, less stretched valuations, he says.

Many would assume the mega-cap US tech stocks hold a particular appeal for super funds. This is not entirely the case.

Figure 1. Australian super fund investments in domestic and international markets

J.P. Morgan analysis reveals super funds are underweight five of the Magnificent 7 stocks – the select group of mega-cap tech stocks, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla – that alone accounted for over 60% of the S&P 500’s return last year, including dividends.

“Alphabet (+46 bp overweight) and Amazon (market weight) were the only exceptions. Notably, though, in the first half of the year, super funds have sharply reduced their underweight positions in the Magnificent 7 by 159bps,” Steed says.

The Australian stock market has a long tradition of being over-represented by banks and resources stocks.

“In the US, about 30% of the stock market is in technology. Concentration risk is something that all investors need to look at from all lenses. The US comprises 70% of the global MSCI ACWI Index, which includes emerging markets,” Bowater says.

“This is concentrated in itself. This is also the index used for the Your Future, Your Super per-

Builder of nations

The abundance of capital flowing should be used wisely and responsibly, says Macquarie Group global strategist Viktor Shvets 05 , who urges institutional investors to dig deep when it comes to the critical role they play in a world where capitalism is moving to a new and yet-tobe-defined alternative system.

Shvets recently told the Impact Investment Summit Asia Pacific that in investing, particularly in the last decade, a new norm has set it in, and the old rules no longer apply.

“The conventional economic cycles are largely gone. Conventional capital markets are largely gone. They don’t exist anymore. So, the whole idea of mean reversion, which is so important in investment analysis, no longer functions because it relies on cycles to determine what you should do at this point of the cycle, and what you should do on another point in the cycle. They no longer exist,” he warns.

Shvets points to economic cycles being subjected to massive pressure over the last 40 to 50 years.

“During that time, we’ve created an abun-

A lot of investors realise now that the Australian market is very thin on the ground as far as diversification. The more they hear about these international companies, the more they want to invest in them.

Liam Shorte

formance test benchmark for global equities. The challenge today for funds is how to outperform markets, as well as to diversify portfolios well when indices are concentrated, and funds are facing increased absolute concentration risk.”

In the DIY space, Shorte’s clients, which are about 40% SMSFs, are starting to buy more ETFs, most notably international ones.

“A lot of investors realise now that the Australian market is very thin on the ground as far as diversification. The more they hear about these international companies, the more they want to invest in them,” he says.

“And ETFs just make it simple. It means there are no single stock exposures, and they are lot more comfortable with that. It is the same for infrastructure and commodities and things like that – clients just find it easier to use ETFs.”

Some clients use Magellan Funds Management to invest in international equities. Shorte says the fund manager has been able explain themselves to clients well and gained a loyal following.

“Magellan tells the story of where it is investing and how they were investing, so it gave people the confidence to use those funds. If someone already had exposure to the managed fund, rather than using the listed entity, they just stuck with what they were used to,” he explains.

dance of capital. We, today, have five to 10 times more capital than we need. It’s not sometimes in the right area, it doesn’t flow into the right areas, but there’s plenty of capital now. That basically explains why central banks have a problem with tightening, because there’s too much capital looking for opportunities,” he says.

He points to institutional investors who have the onus of managing and allocating the abundance of capital responsibly.

“When I look at mean reversionary strategies like investing in cyclicals or thematics, it doesn’t work very well. But I’m not saying mean reversion won’t work at all. What is likely to work, however, is what I call ‘localisation’,” he says.

“That is working with local governments, whatever the country or state it happens to be, and finding the opportunities to contribute towards those solutions, whether it’s climate, housing or affordable healthcare.”

With deep pockets, super funds and many global pension funds have an undeniable role in nation building and economic development, serving as proxies for the government in areas where it falls short, such as refurbishing infrastructure.

A 2024 paper by Keith Ambachtsheer, Sebastien Betermier and Chris Flynn discusses domestic investments of Canadian pension funds and how this has shifted toward

global asset diversification in the last decade.

One driver of this decline is the lack of strategic assets available for sale in Canada, combined with the increased availability of such assets in other countries.

They noted “frictions” to domestic investing and uncovered a gap between the assets available for sale in Canada and assets desired by pension funds.

“Moreover, in recent years other countries have filled this gap by providing access to strategic assets such as large-scale infrastructure properties and projects,” they said.

They conclude that government initiatives that reduce the barriers to domestic investing by facilitating access to strategic asset classes will not only retain and attract capital from Canadian pension funds, but also bring in additional capital from the much larger pool of foreign investors.

Shvets says: “The government cannot do everything. Yes, there’s a lot of capital, but that capital sometimes is not moving where we would like it to go. I compare it to an iceberg. It’s still full of water, but it’s not flowing.”

The role of the government is to “talk to the iceberg and to make sure that it turns into water and flows into the right areas”.

Shvets emphasises the power of technology as one of his favoured thematics when he looks through the lens of investing.

“Technology will continue firing off no matter what, and it will become even more disruptive as we go forward. The way to describe it is that even though we eliminated economic and capital market cycles, business cycles are accelerating at a much faster pace,” he says.

Today, technology and capital markets combined can “skyrocket” productivity in any sector.

“How you deploy that suddenly can propel a company that is [worth] $2 billion into $500 billion. We can now create companies with revenues and profits in as little as four or five quarters, whereas 20 years ago, it might have taken over a decade to build a company that size…” he says.

“We don’t know what the mean is anymore as we go forward. Instead, I tend to focus much more on localisation and thematics, because industries and changes in the economy will continue.”

While Australian super funds are by no means abandoning their domestic commitments and foothold, they are, however, ready for their next stage of their evolution; one that will meet their strategic investment needs.

Later this year, Sydney will host another superannuation summit, riding on the coattails of the US summit in a bid to make the city the financial hub of the Asia Pacific.

IFM’s Whiteley says what Australian super funds have done over the last 30 years is “build incredibly sophisticated portfolios.”

“[In effect] it means that Australian super funds have enabled working people to invest like the wealthiest, most sophisticated investors in the world,” he says. fs

03: Liam Shorte financial planner and SMSF specialist adviser Sonas Wealth

04: Jason Steed head of equity research, Australia and New Zealand J.P. Morgan

05: Viktor Shvets global strategist Macquarie Group

01: Shawn Lee portfolio manager SG Hiscock & Company

Investing in the next generation

Why quality small caps offer compelling returns

Investing in high-quality small companies can offer investors significant potential for upside, driven by the capacity of smaller firms to evolve into the large companies of tomorrow. While challenges remain, green shoots are emerging in various sectors, including the potential for more interest rate cuts in Australia. In terms of valuations, small ordinaries are trading at fair levels, close to their historical average. Small companies are also trading at similar 2025-26 multiples to the ASX100 index, despite significantly higher expected earnings per share (EPS) growth of approximately 17% compared to the ASX100 at 7%.

While valuations are important, the real excitement for investors lies in the growth potential of small caps. We believe that small companies could be in a position to outperform large caps at this point in the cycle. The current market settings are particularly favourable for Australian small companies to outperform their larger counterparts, and a key factor is the commencement of an interest rate easing cycle by the Reserve Bank of Australia (RBA). Periods of declining interest rates are often linked to strong outperformance by smallcap stocks. A good example to reference is the RBA’s easing cycle in 2015, which exhibited similar settings to what we are observing today, supported by strong labour markets and slowing inflation. The 2015 easing cycle saw the ASX Small Ordinaries index perform strongly, posting a total return of 24.8% over 18 months— well above the ASX100’s 3.9% return. This underscores the potential benefits for small caps in a low-interest-rate environment. Lower rates typically boost investor confidence and stimulate cyclical demand, which can be particularly advantageous for growing companies, many of which will also enjoy lower debt service costs.

Reporting season positives

Many quality small Australian companies have solid foundations on which to build. Company results in the recent reporting season generally exceeded expectations, with margin resilience being a particularly prominent feature. This resilience, especially within ASX300 Industrials companies, appears to have been a significant driver of these positive results, which buoyed some companies share prices.

Still, the reporting season was volatile, characterised by substantial share price swings on result day. We witnessed unprecedented share price movements, with the average result day share price change of more than 7%, a historical high. This volatility underscores the importance of active management and a focus on fundamentals, as market sentiment can

shift rapidly driving mispricing, and offering attractive opportunities for patient capital.

Taking a long-term view of potential opportunities is crucial. While the consensus forecast for FY25 earnings per share (EPS) continues its downward trajectory, there is anticipation of a turnaround in the 2025-26 financial year, with cyclical sectors expected to see improved EPS growth. However, the ongoing downgrade cycle for FY25 suggests a cautious approach is necessary, especially given Trump’s tariffs and the risk of a potential trade war. The bifurcation across the economy continues, where socio-demographics have greatly influence recent spending patterns. For instance, mortgagees have been more severely impacted by cost-ofliving pressure compared with the youth and retirees, as mentioned in CBA’s Half Year Results Presentation Pack 2025. The resulting impact on various sectors underscores the importance of a detailed, bottom-up investment strategy.

Another positive factor is the broadening out of market leadership, which suggests a more distributed index performance, rather than the majority of returns being concentrated solely in the largest companies, as we have seen in the US. Examining sector-specific trends continues to point to a soft consumer environment, although green shoots are emerging, with the potential for recovery. Interestingly, essential services have appeared less defensive this cycle, as the economic pressures finally forced consumer downtrading behaviour and some volume losses across historically resilient sectors such as telecommunications and healthcare.

Separately, the impact of artificial intelligence (AI) is also starting to become evident, with some companies reporting material cost savings through AI implementation in areas such as customer support. In particular, we have seen that AI cost savings are starting to materialise and in many cases leading to significant cost avoidance and margin improvement, with companies such as Temple & Webster, HUB24, and NIB all reaping the benefits of AI implementation.

The potential for greater mergers and acquisitions (M&A) is also a developing theme, and we could see increased corporate activity in 2025, with the weaker Australian dollar making local companies attractive to offshore buyers, a trend that appears to be accelerating. However, initial public offerings (IPOs) activity remains relatively subdued and unaided by recently market volatility. In the real estate sector, there are indications that values have troughed, and capital flows are increasing, pointing

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Examining sector specific trends continues to point to a soft consumer environment, although green shoots are emerging, with the potential for recovery.

towards a stabilisation and a potential positive inflection point.

Portfolio benefits of small caps

Adding small companies to a portfolio can have a range of benefits beyond performance. Small caps are generally more diverse in nature than large caps, which in Australia are dominated by banks and miners. Small caps generally reflects a wider cross section of the economy and often provides unique exposure to local growth and innovation. A fundamental approach to identifying these good investments involves a thorough evaluation of earnings quality, focusing on businesses with consistent and predictable income streams.

Emphasis should also be placed on business quality, with a focus on strong business models, clear competitive advantages, and favourable tailwinds within expanding markets. Additionally, management quality is critical especially in small caps, with a preference for experienced leadership teams with proven track records that are aligned with the company’s long-term goals.

The assessment of environmental, social, and governance (ESG) factors is also an integral part of the evaluation, considering both ESG risks and opportunities, and their impact on valuation. Such a comprehensive analysis aims to identify companies with more stable earnings, enhanced resilience to market fluctuations, robust downside protection, and a lower incidence of negative surprises.

In this environment, a focus on quality is key to success. Our approach is focused on finding companies with resilient earnings, a competitive advantage, and strong management teams, and investing in the “large caps of tomorrow”. fs

The Advisers Big Day Out provides financial advisers with leading presentations, networking and professional development opportunities over a one-day event.

Taking place across multiple cities, advisers can connect with specialist fund managers and hear the latest strategies and trends across a variety of asset classes.

After attending the Advisers Big Day Out, advisers will be equipped with additional market projections, insights and product knowledge, while earning legislated CPD hours for a full-day’s attendance.

REGIONAL 2025

Hobart

Tuesday, July 15

Geelong Thursday, July 17

Mornington Friday, July 18

Cairns Tuesday, July 22

Sunshine Coast Thursday, July 24

Gold Coast Friday, July 25

Canberra Tuesday, July 29

Wollongong Wednesday, July 30

Newcastle Thursday, July 31

Central Coast Friday, August 1

Allegro sells Questas stake

Eliza Bavin

Allegro Funds has sold its majority stake in Questas Group to Five V Capital for $375 million.

Allegro acquired the majority stake in Questas in 2019, investing alongside its founder, Kede Carboni, in a partnership deal.

Since then, Questas has grown to become Australia’s largest independent pure play hydraulics company, providing services and distribution to more than 3000 customers across its national network of 35 sites, Allegro said.

Under Allegro’s majority ownership, Questas more than tripled in size, growing revenue to around $320 million.

“The business has executed an organic growth strategy complemented by earnings-accretive M&A that has expanded the company’s hydraulics capabilities and expertise,” Allegro said.

Allegro managing director Jeffrey Largier said he is delighted with the transformation of Questas.

“In partnership with founder Kede Carboni, chief executive Mark Taylor and the hardworking Questas team, we set about building out the Questas hydraulics offering to better cater to the industry’s diverse and fast-growing needs,” Largier said.

“The Questas business is on an exciting trajectory, and we look forward to its continued success under the stewardship of Five V.” fs

Aware spends $1.6bn on MIIX

Matthew Wai

Aware Super has committed $1.6 billion to the Melbourne Intermodal and Industrial Exchange (MIIX) precinct to support expanded capacity and the creation of 3000 jobs.

MIIX, which includes the nation’s first privately funded open-access intermodal freight terminal, is owned and managed by Aware Real Estate and developed in partnership with Barings.

Aware Super’s subsidiary Intermodal Terminal Company (ITC) is currently developing the Melbourne Intermodal Terminal (MIT), the first in its projected pipeline of “independently owned and operated” intermodal terminals.

Development of the precinct was flagged at the start of 2023; it is set to be Australia’s largest intermodal terminal and is intended to boost the national supply chain and generate jobs, bolstering the local economy.

The planned expansion will generate 1250 jobs on top of 60 for MIT’s development and the 750 roles during the construction phase, equating to 3000 jobs in total, Aware Super said.

Aware chief Deanne Stewart said the investment will generate “strong returns” and illustrate private capital’s significance in a long-term vision.

Aware Real Estate interim chief executive Tracey Whitby echoed Stewart’s sentiment.

“MIIX will be a multi-layered destination that lies at the intersection of rail and road in Melbourne’s north, and reimagining what’s possible for the nation’s future supply chain,” Whitby said.

“We also expect an uptick in demand for the Park once the Melbourne Intermodal Terminal becomes operational later this year and ramps up being able to accommodate up to one million TEUs.” fs

01: Peter Johnston executive director Association of Independently Owned Financial Professionals

AIOFP partners to offer white-labelled digital advice

Andrew McKean

The Association of Independently Owned Financial Professionals (AIOFP) has partnered with fintech firm moneyGPS, which will provide its digital advice platform to the advice association’s 120 AFSL members and 5000 financial advisers.

The quote

[Members] having the ability to finally offer these clients and referral partners access to affordable personal advice is a significant milestone...

Through the partnership, AIOFP members will be able to offer digital or hybrid advice services to clients. It will also enable all client cohorts to access single topic advice, delivered under the moneyGPS AFSL.

The moneyGPS service targets client segments priced out of receiving comprehensive advice, including non-advised clients with low balances, insurance-only clients, and millennials.

In a statement, the fintech said its solution will allow for AIOFP member AFSLs to offer a fully white-labelled digital solution, customised for their business, that will help them better engage and scale their referral partner relationships.

moneyGPS founder and chief executive George Haramis said the firm’s vision it to meet the broad advice needs of working Australians at every stage of their lives.

Haramis said the partnership enables AIOFP members to offer clients and referral partners access to compliant digital advice,

including financial wellness programs and online education.

“moneyGPS has already secured several national AFSLs as clients and is fully committed to working with the AIOFP to improve the capabilities of its members,” Haramis said.

AIOFP executive director Peter Johnston 01 said the association’s relationship with moneyGPS has provided it with “genuine opportunity” to offer what its members have been after for a long time – “access to personal financial advice at a fraction of traditional costs.”

“Having the ability to finally offer these clients and referral partners access to affordable personal advice is a significant milestone for their business and for every working Australian,” Johnston said.

“AIOFP’s relationship with NEXT RURAL, a service offering succession planning opportunities for the accounting profession will also benefit from the moneyGPS partnership.

“The AIOFP is excited about its partnership with moneyGPS as its members can now leverage an Australian owned digital solution to future proof their business and help drive better client engagement.” fs

Super fund growth: The winners and losers in FY24

AustralianSuper has kept its position as the fastest growing super fund by net asset growth, adding $43 billion into its coffers in FY2024.

Australian Retirement Trust (ART) followed closely, according to the Conexus Institute’s State of Super 2025 report.

AustralianSuper saw the strongest net member flows and the most growth in dollar terms. ART, meanwhile, stayed in the race by undertaking multiple mergers, including Commonwealth Bank Super and Qantas Super.

Equip Super and TelstraSuper, which are slated to complete their merger later this year, ranked as the next fastest growing super fund by net asset growth. They were followed by Aware Super, Hostplus, and UniSuper, which the report said reflected their relative size, which magnified the impact of flows and market returns on their assets.

The report also highlighted that some funds that experienced “transformational growth” across different asset-size segments, in many cases, thanks to strong flows.

Vanguard, Mason Stevens, Dash, and AMG were among the fastest growing super funds

in terms of asset growth rate, with most of their growth attributed to flows, albeit from smaller asset bases. HUB24 and Netwealth also featured, benefiting from strong flows, but off a more substantial asset base.

Though not every fund was able to keep up the industry’s strong growth in FY2024.

The report noted that Resolution, Bendigo (which was recently acquired by Betashares), and AMP had the slowest asset growth rates.

“AMP didn’t keep pace with the broader growth of the superannuation industry despite strong operating returns. This is largely due to AMP Super experiencing negative flows and the loss of a corporate super plan (Woolworths and Endeavour) to ART,” the report said.

Reflecting on the landscape, the report said while FY2024 was a strong year for overall system growth, there were some standout growth stories.

“The two mega funds (AustralianSuper and ART) both experienced above system growth. Beneath the mega fund category, the growth stories tended to be amongst smaller funds. This is a segment where growth can be needed most to achieve scale benefits,” it said. fs

PE left 3bn tonnes emissions: Emmi

Karren Vergara

Emmi estimates that the private equity sector has left three billion tonnes of carbon footprint, but more precise figures are difficult to obtain in the opaque asset class.

The recently published Company Emissions Estimates for Private Markets report calculates that private equity comprises about 20% of an institutional investor’s multi-asset portfolio.

Citing McKinsey data, global private equity investments reached $8.2 trillion in 2023.

“That year, industrial carbon emissions were 37.2 billion tonnes. Assuming PE is roughly 8% of global Gross Domestic Product (GDP) (~$105 trillion), then the sector’s total carbon footprint was about 3 billion tonnes. This is not insignificant in comparison to the public equity footprint of ~11.4 billion tonnes,” the report said.

Emmi highlighted the lack of emissions reporting requirements in the unlisted company sector has made it difficult to estimate the carbon footprint of private equity assets, and the sector as a whole.

“This is an increasing problem for investors and other funders as their reporting requirements ramp up globally in 2025,” Emmi said.

In overcoming data scarcity for unlisted companies, Emmi used a machine learning (ML) approach to estimating Scope 1, 2 & 3 emissions for private companies, as well as industry emission factors from input-output models.

Emmi said calculating the carbon footprint for private equity is important because many governments are increasingly making unlisted companies accountable in regulating carbon emissions in line with public companies. Exits will also need better carbon due diligence. fs

SSGA dominates ESG market

State Street Global Advisors (SSGA) continues to dominate the ESG and ethical investment market, according to Rainmaker Information, with a nearly 40% holding.

The latest Institutional Roundup report shows SSGA commands 37.9% of the market with $168.3 billion in ethical and socially responsible investments at the end of 2024.

BlackRock comes second with a 14% market share and $62.1 billion, while Magellan Asset Management has $24.2 billion and a 5.4% market share.

ISPT has $20.9 billion with 4.7% slice and Metrics Credit Partners comes in fifth place with $18 billion in assets.

Rounding up the top 10 ESG managers were PIMCO, AQR, Australian Ethical Investment, J.P. Morgan Asset Management and Plato Investment Management.

Rainmaker assessed managers whose portfolios use ESG, ethical or SRI screens, either positive or negative, constructed around criteria including ethical, environmental, governance or other socially responsible factors.

Among the biggest Australian-owned fund managers, Macquarie Asset Management takes the lead with a 14.7% market share encompassing $294.6 billion in assets. fs

01: Simon Esposito co-chief investment officer Rest

Rest backs $300m solar farm and battery project

Matthew Wai

Octopus Australia has announced the financial closing and the commencement of construction of its 80mw Fulham solar farm and 128 megawatt-hour (mwh) battery project, backed by key investors including Rest.

This comes as the majority of Rest members are increasingly expecting the super fund to “invest responsibly and think about sustainability.”

The quote

We’re excited to reach this milestone and see construction get underway.

The Fulham project was developed by Octopus in-house technology to develop the innovative hybrid solar and battery storage design, which will enhance local grid reliability while supporting Victoria’s clean energy transition, Octopus Australia said.

It will be one of the first DC-coupled solar and battery hybrid assets in Australia and adds to Octopus’ renewable portfolio exceeding $11 billion across wind, battery storage and solar assets on the east coast.

Those include the constructions of $850 million Blind Creek Solar Farm and Battery in New South Wales and the $800 million standalone Blackstone Battery in Queensland.

Rest interim co-chief investment officer Simon Esposito 01 said its members will benefit from the “attractive return prospects from the project.

“Octopus’s focus on renewables offers a

fantastic opportunity for Rest’s two million members to benefit from the ongoing decarbonisation of the economy. We’re excited to reach this milestone and see construction get underway,” Esposito said.

Octopus co-managing director of renewables Australia Sonia Teitel added the Fulham project will help move forth the nation’s energy transition.

“This project demonstrates our ability to bring together institutional capital, government support, and leading-edge technology to create renewable assets that provide long-term benefits to our communities and investors,” Teitel said.

“I’m incredibly proud of our team’s efforts in bringing the project through development, and we look forward to beginning construction.”

It also attracted commitments from the likes of the Clean Energy Finance Corporation (CEFC) and clients of Westpac Private Bank, backed by a power purchase agreement (PPA) with the Victorian state government.

CEFC chief investment officer, renewables and sustainable finance Monique Miller said: “The CEFC is proud to support the continued growth of new clean generation along with the storage, transmission and infrastructure that is crucial to Australia’s energy grid.” fs

Trump presidency pushes Aussies to ethical superannuation fund

Jamie Williamson

The inauguration of President Donald Trump in the US and the heightened volatility and uncertainty that has followed has been a boon for Future Super, the fund says.

Analysis of Future Super’s member acquisition data shared with FS Sustainability shows a surge in new members in Q1.

Interestingly, the largest spike in new members came in the third week of January – the same week Trump was inaugurated and commenced his second, non-consecutive term.

In the three months to March end, Future Super had a 24% increase in new members joining. This is compared to the same period for the past three years.

Of the new joiners, 55% identified as male and 45% identified as female, and they were predominantly aged between 23 and 27 years old.

Geographically, the most new joiners were in Melbourne (VIC) and Surfers Paradise (QLD), followed by Blacktown (NSW), Haymarket (NSW), Brunswick (VIC), Sydney (NSW), Caboolture (QLD), Craigieburn (VIC), Truganina (VIC), and Bankstown (NSW).

Since coming to power, the Trump administration has actively moved to scale back US involvement in climate change initiatives, and publicly derided diversity, equity and inclusion (DEI) initiatives, spurring many corporates to abandon their own DEI measures.

In February, Future Super conducted member polling with Essential Research, finding that 25% of members were more likely to favour ethical investments because of Trump’s election.

Just 7% said it would make them much less likely.

“What we know is that our members care about what is happening globally. They want a superannuation fund that actually invests in their future, and they are prepared to move to ensure their values are reflected,” Future Super executive director, customer and growth Amanda Chase told FS Sustainability

“In times of large change, we see consumers take action and this is what Future Super is currently witnessing.”

The polling also uncovered an unexpected political consensus, with members who identify as Coalition and Greens voters (66%) showing equally strong support for ethical investment practices from their super funds.

Further research revealed older Australians aged 55 and over are leading the charge for ethical superannuation investments, with 65% of this demographic saying they expect their super funds to invest responsibly and ethically.

“This cross-political alignment suggests ethical investing is transcending traditional ideological divisions in Australian finance,” Future Super noted.

The 2024 From Values to Riches report from the Responsible Investment Association Australasia shows nearly 90% of Australians expect their super savings and the money in their bank accounts to be invested responsibly.

Seventy-five percent said they would consider switching their super fund to ensure their investments were invested in line with their values. fs

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Platinum funds to be merged

Eliza Bavin

Platinum Asia Investments (PAI) has rejected a non-binding indicative proposal from the PM Capital Global Opportunities Fund and will move forward with plans to merge with the Platinum Asia Fund Complex ETF (PAXX).

PAI’s independent board reviewed both merger opportunities and rejected the PM Capital offer on the grounds that it was not superior to the Platinum proposal to merge PAI with PAXX.

PAI and PAXX had signed a Scheme of Implementation Deed on 1 October 2024, which was then amended on 13 November 2024, before receiving the non-binding proposal from PM Capital on 27 February 2025.

Platinum said it was not involved with the assessment of the proposal from PM Capital but that it “fully endorses” the position taken by the PAI board.

Platinum said that its proposal achieves the PAI board’s primary objectives while retaining investors’ chosen investment manager and strategy.

“Platinum reiterates that the Platinum proposal addresses the PAI board’s stated aims of permanently solving for the share price discountto-net tangible assets, a problem that plagues almost all listed closed ended vehicles, while, at the same time, retaining the investment manager and strategy that investors have chosen,” Platinum said.

“PAXX, being an open-ended managed fund traded on the ASX, also provides investors with an ability to exit at any time at or around net asset value.” fs

Rainmaker Mandate top 20

Apex wins $7bn mandate

Karren Vergara

Apex Group has won a mandate to administer Diversa Trustees’ $7 billion master trust business.

Diversa will use Apex Superannuation going forward, part of which means utilising Iress’ Acurity platform.

The quote

We have invested a lot of time and focus on our superannuation business over the past 24 months and this partnership is testament to our capabilities in this space.

Iress offloaded its superannuation business to Apex in January. Apex also expects to take over Acurity upon finalising its acquisition of Iress in the second quarter of this year.

Diversa is the trustee of several of APRA-regulated superannuation funds via an extended public offer licence. These include retail master trusts, corporate funds including defined benefits, platforms or wraps, pooled superannuation trusts, and risk-only superannuation funds.

Diversa had $13.3 billion in total assets under management across its subplans at the end of June 2024, APRA figures show.

Apex Group regional managing director for Asia Pacific Nicholas Happell01 said Apex won the mandate following a competitive tender process.

“We have invested a lot of time and focus

on our superannuation business over the past 24 months and this partnership is testament to our capabilities in this space. Our local team is proud of this new partnership and committed to delivering the highest level of service to Diversa, in turn enhancing the value it delivers to its own customers,” Happell said.

Apex is aggressively expanding into the Australian market, recently hiring Nick Bradford as country head for Australia and Chris Stevens as chief operating officer for superannuation. Apex Super partnered with Novigi last year to beef up its superannuation data and technology services. It also received $1.6 billion from Carlyle Group and Goldman Sachs to execute its growth strategy.

Diversa chief executive Andrew Peterson said: “Apex Group’s ability to deliver an unbundled service is of particular benefit, and we see real potential to leverage off Apex Group’s robust technology platform and integration capability, supporting our promoter stakeholders and unlocking scale and efficiencies and achieving better results for our clients.” fs

Managed funds

Managed Funds

Beyond the cheque: HNWs evolving philanthropy

Judith Fiander, Philanthropy Australia

Philanthropic giving, a cornerstone of societal progress, continues to transform. High-net-worth families, increasingly driven by a desire for tangible impact, are moving beyond traditional donation models to embrace more engaged, strategic, and trustbased approaches.

This evolution reflects a growing recognition that addressing complex societal challenges requires more than just financial resources.

Australian Philanthropic Services (APS) as the leading independent, not-for-profit philanthropic services organisation, supports more than 950 clients who give via structures; either their own private ancillary fund or who have a giving fund within the APS Foundation. This client work brings us into contact with changes in giving trends on a day to day basis.

One pivotal shift is the rise of “engaged giving.” This model transcends mere funding, advocating for the “5Ts”: Time, Treasure, Talent, Ties and Testimony. Funders are actively contributing their expertise, networks, and advocacy, fostering deeper partnerships with charities. Whether through joining giving circles like the APS-run Bloom Giving Circle, collaborating on co-funding initiatives, or leveraging their professional skills, these families are recognising the multiplier effect of their involvement.

Furthermore, the landscape of social impact is diver -

sifying. Social enterprises, businesses with a core social or environmental mission, are gaining traction.

These entities, often relying on philanthropic support for early-stage development, offer a sustainable revenue model, reinvesting profits to amplify their impact. High net worth individuals are increasingly interested in understanding the social enterprise ecosystem, connecting with state social enterprise councils, and exploring opportunities for strategic investment.

A significant paradigm shift is the growing acceptance of advocacy as a legitimate philanthropic pursuit. Funders are moving beyond “band-aid” solutions to address systemic issues. This involves supporting initiatives that challenge entrenched power structures, influence policy decisions, and promote social change.

From advocating within their networks to funding organisations dedicated to systems change, these families are leveraging their influence to drive meaningful reform.

Collaborative efforts like The Investment Dialogue for Australia’s Children are bringing funders and stakeholders together to advocate for systemic improvements in early childhood development, demonstrating the power of collective advocacy and engagement.

The causes attracting heightened attention reflect a changing societal consciousness. Mental health, climate change, domestic and family violence, homelessness,

and inequity are gaining prominence, particularly among younger generations.

This surge in interest is accompanied by a deeper understanding of the interconnectedness of these issues. Funders are recognising the importance of intersectional approaches, acknowledging that addressing one challenge often requires considering multiple underlying factors.

Finally, trust-based giving is revolutionising the funder-charity relationship. This model shifts power dynamics, empowering charities to allocate resources according to their expertise and needs.

Unrestricted, multi-year funding allows organisations to focus on their mission rather than navigating complex reporting requirements.

The “Pay What It Takes” movement, championed by leading philanthropic foundations, further reinforces this trend by advocating for funding that covers the true costs of charitable work, including essential administrative expenses.

These evolving trends signify a new era of philanthropy, one characterised by active engagement, strategic investment, and a commitment to systemic change. High-net-worth families are donors but also active partners in creating a more equitable and sustainable future. By embracing these innovative approaches, they are maximising their

and redefining the

of giving.

DWS fined $43m for greenwashing

Jamie Williamson

DWS will pay $43 million (US$27m) to settle a long-running greenwashing case brought by Frankfurt prosecutors.

In 2021, a whistleblower – former DWS group sustainability officer Desiree Fixler – came forward with claims the asset manager was making misleading public statements about its commitment to environmental, social and governance (ESG) investing.

At the same time, both regulators in Europe and the Securities and Exchange Commission (SEC) in the US turned their attention to DWS.

The asset manager settled a case brought by the SEC in 2023, paying $39.8 million (US$25m) over allegations of greenwashing and weak antimoney laundering processes.

However, the case brought by the Frankfurt Public Prosecutor’s Office lasted longer.

First lodged in 2021, the case accused DWS of greenwashing over a period of close to three years, with prosecutors saying that investors were misled between mid-2020 to the end of January 2023 by claims that ESG was integral to the investment approach of DWS.

DWS also claimed to be a “leader” in ESG investing, but German prosecutors said such statements “did not correspond to reality.”

DWS has agreed to pay the $43 million fine and said that it would not impact its first quarter results.

“We welcome the conclusion of the investigation into DWS by the Frankfurt Public Prosecutor’s office,” the firm said.

“The Frankfurt Public Prosecutor’s Office has identified a negligent infringement and issued a fine to DWS in relation to deficits in the past regarding certain ESG-related documentation and control processes, procedures and marketing statements.” fs

Pella fund launches in NZ

Pella Global Generations Fund has launched in New Zealand under a portfolio investment entity (PIE) structure.

Expanding across the ditch, Pella Funds Management head of distribution Joy Yacoub said the flagship fund experienced growing demand from the New Zealand market in mid-2024.

“This is a meaningful milestone for Pella as we simplify access to our fund for New Zealand investors through the PIE structure. We are proud to bring this offering to the New Zealand market, where demand for responsible investing continues to grow,” she said.

The Global Generations Fund has nearly $100 million in funds under management, according to Morningstar.

The fund achieved 14.8% p.a. net of fees in the year to February, trailing its benchmark’s 20.5%.

Since inception, it achieved 9.5% p.a. while the benchmark turned in 11.4% p.a.

The Global Generations Fund was spun off into the Pella Global Securities Sustainable Fund, a UCITs product domiciled in Luxembourg, in 2023. The UCITs applies the same strategy as the Global Generations Fund which is run locally. fs

01: Ali Dibadj chief executive Janus Henderson

Janus Henderson to take on $75bn fixed income portfolio

Eliza Bavin

Janus Henderson has entered a strategic partnership with The Guardian Life Insurance Company of America (Guardian) to manage its $75 billion (US$45 billion) investment grade public fixed income portfolio.

The quote

Our shared culture of collaboration and dedication to our clients make them a natural partner for Guardian.

As part of the partnership, Guardian investment professionals who currently support the asset class will have the opportunity to join Janus Henderson, which Guardian said would provide continuity in the management of the assets while enhancing Janus Henderson’s insurance investment capabilities.

At the completion of this transaction, Janus Henderson will manage over $247 billion (US$147 billion) in fixed income assets globally and over $183 billion (US$109 billion) for global insurance companies.

The partnership positions Janus Henderson as a top 15 unaffiliated insurance asset manager.

In addition, Guardian will commit up to $673 million (US$400 million) of seed capital to help accelerate Janus Henderson’s continued innovation in securitised credit and high quality active fixed income products, as well as other fixed income capabilities.

Guardian and Janus Henderson will also codevelop proprietary, multi-asset solution model portfolios for Guardian’s dually registered broker-dealer and registered investment advisor, Park Avenue Securities (PAS), which has more than 2400 advisors covering approximately $98 billion (US$58.5 billion) of client assets under management.

As a partner to PAS, Janus Henderson will develop investment solutions for PAS clients.

Janus Henderson chief executive Ali Dibadj 01 said he was “honoured” to partner with Guardian.

“This multifaceted, innovative partnership, founded on a shared set of client-focused values, leverages our complementary strengths, creates alignment for mutual growth, and intends to achieve mutually beneficial outcomes for policyholders, our clients, shareholders, and employees,” Dibadj said.

“This strategic partnership also supports the execution of Janus Henderson’s client-led vision of amplifying our strengths in fixed income, multi-asset solutions, and model portfolios, while greatly expanding our presence in the institutional market and insurance space.”

Guardian chief executive and chair Andrew McMahon said the partnership will help to enhance Guardian’s investment and solutions capabilities.

“Our shared culture of collaboration and dedication to our clients make them a natural partner for Guardian. By combining Guardian’s exceptional experience with Janus Henderson’s market-leading investment strategies, resources, and capabilities, we will be able to offer innovative investment and wealth management strategies that will benefit customers and policyholders for years to come,” he said.

This partnership transaction is expected to close at the end of the second quarter of 2025. fs

Managers back Avoided Emissions Platform

Karren Vergara

Twelve asset managers with US$4 trillion of assets under management have helped launch the Avoided Emissions Platform (AEP), a new tool that calculates avoided emissions to assess the impact of climate solutions.

The Avoided Emissions Platform (AEP) models avoided emission factors for 65 climate solutions based on a transparent and open access methodology for calculating avoided emissions, sometimes also referred to as “scope 4”.

Robeco, Mirova, Man Group, Natixis Corporate & Investment Banking, Natixis Investment Management, Amundi, Comgest, Edmond de Rothschild AM, Sienna Investment Managers and Caisse des Dépôts are founding partners in the initiative.

The group said the energy transition necessitates not only a shift away from carbon-intensive activities but also the availability of decarbonised alternatives.

“However, until now, there has been a lack of transparent, quantified data to support the comparison of these alternatives and to redirect financial flows toward companies facilitating decarbonization. With an estimated investment requirement of US$215 trillion to achieve global net-zero emissions by 2050, the development of harmonised metrics is essential for

channelling capital into effective climate solutions,” they said.

AEP helps financial institutions gain enhanced decisionmaking capabilities using metrics that help align their portfolios with global net-zero objectives. Companies will be able to use AEP to calculate and communicate their avoided emissions, while regulatory bodies can access insights to inform policy development and track progress toward climate goals.

Robeco climate and biodiversity strategist Lucian Peppelenbos said Robeco’s climate products, such as the Smart Energy and the Global Climate Transition funds, have been investing in climate solutions for many years.

“This new database will help us credibly quantify their true contribution to climate mitigation. This addresses the high demand from our clients for more extensive impact measurement,” Peppelenbos said.

Mirova climate and environment lead expert Manuel Coeslier said: “Clear and comprehensive information on companies’ true contributions to this goal is essential, notably through the provision of climate solutions. We are confident the Avoided Emissions Platform will soon establish itself as a global market platform, thus enhancing ambition and transparency in measuring avoided emissions.” fs

Trade war rattles economic outlook

Treasury admits that escalating trade hostilities and risks to the economy are “more significant than expected” as it releases its Pre-election Economic and Fiscal Outlook (PEFO).

While the government’s Budget figures have not changed since they were announced on March 25, the PEFO report factored in the effects of the US tariffs that threaten to undermine its projections.

“The potential magnitude and persistence of the economic effects of these announcements has resulted in greater-than-usual uncertainty around the outlook,” Treasury said.

On April 3, US President Donald Trump slapped a slew of tariffs on goods imported into the US, ranging from 10% to 50%. The next day, China announced countermeasures, including imposing a 34% tariff on all goods imported from the US.

Most Australian-originating goods imported to the US were hit with a 10% tariff effective April 5.

Treasury flagged that economic activity, commodity prices and inflation are particularly at risk of destabilisation.

“Over the past few days, there have been significant falls in oil prices and a depreciation of the Australian dollar. Both developments would have implications for activity and inflation if they were to persist,” the report said.

“In addition, there have been significant falls in other commodity prices in recent days. If these lower commodity prices were to persist, this would have implications for nominal GDP and revenue.” fs

01: Brian Parker chief economist Australian Retirement Trust

ART urges long-term perspective amid chaos

Karren Vergara

The quote

... we worry about what’s happening in the short term, but we can’t forecast it, and we can’t control it, and we can’t design portfolios on that basis.

Speaking at a financial adviser roadshow in Sydney, Australian Retirement Trust chief economist Brian Parker 01 discussed the many risks he and the investment team are fielding in the wake of US President Donald Trump’s most recent tariff announcements.

In the lead up to the event, major stock market indices lost billions in value, with the S&P 500 Index dropping as much as 6%.

Parker warned that risks of a major global downturn has dramatically increased and will likely eventuate if US policymakers continue their current path.

“Our job is not to focus so much on what is happening in the short term. Absolutely we worry about what’s happening in the short term, but we can’t forecast it, and we can’t control it, and we can’t design portfolios on that basis,” he said.

“We can’t design portfolios to try and

position for how markets are going to fare next month or the month after, or how they might perform over the next six or 12 months. We focus a lot more of our research effort and portfolio management thinking on how the world and how asset classes are likely to evolve over the next five, 10, 15 and 20 years.”

The average age of an ART member is about 40, which means that the super fund is “hopefully going to be investing their money the next 20, 30, 40 and 50 years and that has to be part of that mindset.”

The investment team is confident that the next decade will reward an equity risk premium and that equities will outperform cash and bonds.

The portfolio is currently underweight equities and overweight bonds and putting dry powder to work, notably in equities across nonUS markets.

Relying on bonds alone to diversify away equity risk will not work, he noted. fs

Australian equities

Tariff tales

Pooja Antil

The last few weeks have been erratic for geopolitics and investment markets around the world. For Australia, it all started in early March when the Trump administration imposed a 25% tariff on Australian exports of steel and aluminium. This new tariff overrides the Australia-United States Free Trade Agreement (AUSFTA) that provides for duty free trade between the two countries.

Australian steel and aluminium exports to the US represent less than 0.2% of the total value of exports. Despite that, combined with other factors at play S&P/ASX 200 lost 3.4% in March and the one year return to March was diminished to 2.8%.

Fast forward to April, first the Trump administration imposed more tariffs on several of its trading partners, ranging from 10% on Australia to between 35 to 40% on its Asian trading partners. This caused S&P/ASX 200 went tumbling losing 0.9% on day one of announcement, 2.4% on day two 4.2% on the third day.

Later, in its usual fashion, all tariffs were paused for 90 days except on China. This was some relief and rebounded markets,

consequentially S&P/ASX 200 went up by 4.5% after the pause was announced. The current US tariff on China is 145% while China retaliated with imposing 125% tariff on US exports.

The US accounts for only 7% of Australia’s total goods exports, so the direct economic impact of tariffs is not expected to be huge. However, the indirect effects on investor sentiments, global growth, consumer and business confidence could be severe.

In nutshell, the S&P/ASX 200 has lost 6% cumulatively to 11 April 2025, but there were sectors that bared bigger losses. Information technology stocks were the biggest underperformers for this year so far with a total year to date return of -18%. Healthcare sector was second in place with -13%.

Financial and Materials both earned a cumulative return of -5%. The sector with highest positive return was communication with a total year to date return of 5%.

At the time of writing this article, latest development in the US tariff saga was the tariff exemption for smartphones, computers and other electronic items, and is expected to give a boost to information technology stocks. fs

International equities

How unhedged currencies help in a crisis

John Dyall

It’s been a tumultuous time on global sharemarkets since the full extent of Trump’s tariffs were announced. There’s no guarantee the turmoil will be over by the time this article is published. In fact, continued chaos is the forecast, with a chance of recession.

While there is much talk on the amount of money “lost” in the sharemarket correction (at the time of writing it was close to a bear market) one thing that is not covered is the effect of currency on softening these losses.

The S&P 500 Index peaked on January 23 this year. From then until April 7 it lost 17%. That’s in the index’s local currency, the US dollar. This puts it well into correction territory (losses of at 10% from the peak) and close to being a technical bear market (losses of 20% or more from the peak).

However, in Australian dollar terms, and assuming zero currency hedging, the loss was 3.6 percentage points lower, at -13.4%.

This is because the Australian dollar began that period with an exchange rate of US$0.6273

and finished the period with an exchange rate of US$0.6011. That’s a depreciation of 4%.

Investors being currency unhedged has been one of the greatest diversifiers available. Was there a cost to this diversification? No. In fact it was more than free in that the volatility of daily returns for an unhedged portfolio was less than it was for a hedged portfolio (21.3% pa versus 23.7% pa). That might not sound like much, but not only was the unhedged portfolio less volatile, it had higher returns. It was a win/win.

Unfortunately for many investors in super funds their trustees – who represent the members – believe that currency hedging a significant portfolio of their international equities is the way to go. For a super fund that has half of its international equities portfolio currency hedged, the loss to an investor with, say $1 million in their account, was $18,000 in just a couple of months.

There is no valid investment reason for super funds to currency hedge their international equities portfolios. It makes the portfolio less diversified and it comes with higher volatility. fs

Source: Rainmaker/CoreLogic RP Data

Figure 2. Volatility currency hedged vs. unhedged

Figure 1. Total returns currency hedged vs. unhedged

Figure 2. Australian sectors cumulative year to date returns

Figure 1. S&P/ASX 200 year to date cumulative returns

Prepared by: Rainmaker Information

Source: Factset

Prepared by: Rainmaker Information

Source: Factset

1. How much does the US account for the total value of Australian steel and aluminium exports?

a) Less than 0.1%

b) Less than 0.2%

c) Less than 0.5%

2. The S&P/ASX 200’s one year return to March 2025 was 2.8%.

a) True

b) False

3. Which sector is the most underperforming on year to date returns (to April 11)?

a) Information Technology

b) Communication

c) Financial

d) Healthcare

CPD Questions 4–6

4. The S&P500 Index peaked on:

a) 31 December 2024

b) 23 January 2025

c) 14 March 2025

d) 1 April 2025

5. During the current market correction, a currency hedged version of the S&P 500 has outperformed the unhedged version by:

a) 3.6 percentage points

b) 4.6 percentage points

c) It didn’t outperform

6. In this current sharemarket correction, leaving currency unhedged in international equities portfolios:

a) Lowered overall volatility and increased returns

b) Lowered overall volatility and decreased returns

c) Increased overall volatility and increased returns

d) Increased overall volatility and decreased returns Australian equities CPD Questions 1–3

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Track

ON THE MOVE

Liz McCarthy has spent her whole life on the move, which has taught her invaluable lessons about life, work and always moving forward.

Eliza Bavin writes.

Liz McCarthy’s path to becoming the chief executive of MLC Expand was one with many twists and turns.

Even her upbringing was anything but typical. The daughter of a chemical engineer, McCarthy had seen more of Australia before she hit her teenage years than most.

“I was born in Melbourne and shortly afterwards we moved to Sydney. When I was nine, we moved to Brisbane. We stayed there for a few years and then we came back to Sydney when I was around 12. So, we moved around a lot,” McCarthy says.

McCarthy says when she was younger the constant moving bothered her, but as she grew up she realised how important it was to experience new cities and people, and decided that was something she wanted to instill in her kids as well.

“I can re-root very easily, it really helped me to be flexible but organised. I really wanted my kids to experience that as well,” she says.

“We moved to Tokyo as a family and ended up staying there for around three years, and it was incredible, although it was very tricky. There is so much paperwork, it’s not an easy place to move to.

“And it was difficult, at first, for the kids –moving them to a new country where they didn’t speak the language, but in the end, they didn’t want to leave Tokyo to come back.”

At the time, McCarthy was working with Jetstar as head of customer care. In fact, she has held many roles that one might not think would lead to heading up MLC’s Expand platform - but McCarthy did start her career in financial services.

She did stints at AMP and Westpac before climbing the ranks at Macquarie to become head of marketing.

She then spent more than six years with Jetstar, followed by two years with humm group and four years with OneTwo Home Loans.

“I spent 13 years away from financial services and Wrap platforms and was able to come back with a very different view of things,” she says.

“There are so many things I learnt along the way that I was excited to bring to this role.

“I’ve got this need to seek out new experiences and new things, I like putting myself into situations where there is a learning curve, and I’ve been able to find that in this position too.”

During her time with One Two Home Loans, McCarthy was working at the forefront of artificial intelligence – well before the AI boom.

As chief executive, she led the company through an M&A process with ANZ, relaunched the company’s strategy, led an organisational redesign and launched a shortand long-term incentive program.

“I basically got a call saying they needed someone to come in to help the business. It was a joint venture between ANZ and Lendi Group

(now Aussie Home Loans) which had spun out into a software platform. They wanted to build this software that would power the home loan process using AI,” McCarthy explains.

“It was AI, but no one was calling it that at the time. We were building the AI ourselves, and it was all about digitising the home loan process so that we could take all the friction out of it.”

Having got a knack for AI, how it can be used, and the best use cases for it made McCarthy a great choice for MLC.

“There are maybe three or four use cases that we’ve really pushed along so far, because I know what the technology is capable of and how to make it happen,” she says.

“And we have a great team here who can see that through… they can really power through things.”

There are currently 80 engineers working on Expand but, when combined with the delivery squads, this number almost doubles to 150.

The wealth manager is deploying AI to support human beings in its service centre.

“… which means that you can get hold of a human, and that human will manage and solve that problem from end to end. We’re not going to be eliminating humans out of this category at all,” McCarthy says.

“Some of our competitors have decided to do that, but we’re not doing that. We’re enabling them using AI.”

McCarthy says they’re also working on doing proof of concepts for adviser practices, so they can use AI to help with productivity and driving profitability.

“We’re working with practices and their back-office teams to automate generation of Statements of Advice, or Records of Advice, pushing them to their frontline staff, where they simply scan the document and move it to the next stage. All those things are coming to life here as well, all using AI,” she says.

As for the other elements of working with MLC, McCarthy says she has learnt a lot from Insignia Financial chief executive Scott Hartley.

“I think one of the reasons why I’m enjoying this role so much is because of his leadership style and the way he goes about things. He’s honest, transparent and authentic. He tells you as it is, he speaks out, and he makes things happen. And that’s easy for me to be a part of, because it’s so authentic,” she says.

“Having been a chief executive in a startup, it’s a very lonely space when you’re on your own, so I respect that capability to stand alone, make a decision and own it.”

As for her own leadership style, McCarthy says she likes to lead by listening and having endless curiosity.

“I just think it’s so important to listen and value the opinions of those around you, that’s what inspires great teamwork and a high-performance culture,” she says.

I just think it’s so important to listen and value the opinions of those around you, that’s what inspires great teamwork and a highperformance culture.

Liz McCarthy

While it’s clear McCarthy doesn’t like to sit still for long, she does try to take time to organise her days carefully.

“I have a rule to not do meetings before 9:30am. I like to give myself some time in the mornings to go for a run or do pilates and then start smashing out my work for the day,” she says.

“It can be hard; I usually pick up my phone first thing in the morning and start working and then it’s the last thing I do at night before I go to bed. But if I can get something done for myself before 9:30am, I feel better.

“I’ve learnt my limitations over the years, and I know what gives me energy is getting some alone time. It helps fill up my cup so I can focus on everything else I need to do.”

As for the future, McCarthy is excited. While she doesn’t like to stay in the same place for too long, she still feels that there is a lot left to achieve in her current role.

“It’s an industry that is changing rapidly and that presents a lot of opportunities for the team,” she says.

“What’s nice is that we are all really dedicated, we have a shared vision, and we’re all working towards that. We just want to keep up that momentum.” fs

Financial Standard vol23n07

Fake family offices emerge from shadows

Coalition targets 30k advisers

CA ANZ launches AI certificate

More big problems for big super

First Sentier to enter ETF market

Global investor services group comes down under

Hostplus limits investment options

Coalition targets 30k advisers

CA ANZ launches AI certificate

Cybercriminals attack major superannuation funds

AMP shareholders approve pay

GESB expands leadership team

Future Group positions super offerings for growth

Perpetual to build digital wholesale term deposit marketplace

WTL merges three advice firms

Adviser exam pass rate declines

The super fund scouring the dark web to protect members

Three AFS licensees pinged over breaches

RBA flags risks to super system

Hejaz receives $182m injection

TAL takes 15% stake in Challenger

ASIC asks for input on RS, IDR dashboards

There is more to investing than tariffs and trade

Go premium with

Executive appointments

IFM Investors names operations chief

expert joins Australian Ethical

team

QIC bolsters sales leadership

Feature | Superannuation

London, New York calling

US$1tn

Builder of nations

Investing in the next generation

Why quality small caps offer compelling returns

Reporting season positives

Portfolio benefits of small caps

REGIONAL 2025

Allegro sells Questas stake

Aware spends $1.6bn on MIIX

AIOFP partners to offer white-labelled digital advice

Super fund growth: The winners and losers in FY24

PE left 3bn tonnes emissions: Emmi

SSGA dominates ESG market

Rest backs $300m solar farm and battery project

Trump presidency pushes Aussies to ethical superannuation fund

Leading market insights for wealth managers

Wholesale Advantage Report

Exchange Traded Products Report

Managed Fund Net Flows

Request a demonstration

Platinum funds to be merged

Rainmaker Mandate top 20

Apex wins $7bn mandate

Managed funds

Managed Funds

Beyond the cheque: HNWs evolving philanthropy

DWS fined $43m for greenwashing

Pella fund launches in NZ

Janus Henderson to take on $75bn fixed income portfolio

Managers back Avoided Emissions Platform

Trade war rattles economic outlook

ART urges long-term perspective amid chaos

Australian equities

Tariff tales

International equities

How unhedged currencies help in a crisis

ON THE MOVE