05
News: BlackRock, Generation Development Group
09
Opinion: Martin Rea, JANA Investment Advisers
Super funds, insurers drag IP recovery
Karren Vergara
While disputes continue to reach sky-high levels, income protection (IP) appears to be overcoming existential issues and delivering to customers, particularly as APRA retracts its regulatory tenterhooks. However, the way in which superannuation funds and insurers have recently botched claims handling means that IP is not out of the woods yet.
Otherwise known as disability income insurance (DII), new APRA statistics show that in 2024 total income protection disputes reached 1987 for advised customers, 366 for non-advised customers and 2896 for group super. It begs the question why IP attracts the highest number of claims compared to other products.
Sam Perera, director of Perera Crowther Financial Services, says: “I think the answer to that is because there are so many moving parts in relation to income protection – the waiting period, benefit period and the calculation of monthly benefit. These are the major elements of a claim in addition to ancillary benefits, offset clauses and so forth.”
Citing data from Acenda, Perera points out that about 5700 claims were paid last year for income protection – five times more than any other product type.
“That gives you some context or an indication of the value of income protection. About 30% [of the 5700] relates to mental health. That’s an important number because one, it shows the value of income protection and secondly, it shows that the sector has been struggling with the increase of mental health claims, especially in the areas of IP and TPD,” he says.
The Australian Financial Complaints Authority (AFCA) received 1468 IP-related complaints in FY24. Of those, 938 related to group super and 530 came from retail insurance. Across both groups, delay in claims handling was the top issue for policyholders.
In retail IP claims, AFCA lead ombudsman, insurance Emma Curtis sees many complaints about benefit calculations – particularly where the insured person is self-employed.
“This is because the benefit amount is usually calculated by reference to the person’s pre-disability income. When someone is self-employed, there may be disputes around what their business income and expenses were,” she says.
“We’d encourage insurers to consider how
they could provide greater certainty to their self-employed policyholders about the way income protection benefits will be calculated in the event of a claim.”
Complaints about IP premium increases are also common. One way insurers can reduce the number of complaints is via clearer communication and stronger transparency about premium options and likely future increases.
“In our experience, many complaints are not about the premium increase itself but about a lack of clear information about how premiums are set and why a premium is rising,” she says.
At the group insurance end, delay in IP claims handling is the top issue, especially with insured benefits.
AFCA lead ombudsman, superannuation Heather Gray urges super funds and insurers to improve response times, seeing that many complaints also arise from unclear or misleading communication about the cover and eligibility.
“In superannuation, we recommend that insurers and trustees review the disclosure and communications they provide to fund members about their cover, to see where information could be presented more clearly. This is a complex area, and policies can have complicated terms that are often not well understood,” Gray says.
TAL and Zurich Australia hold the biggest market share of the advised segment, roughly 21-22% respectively.
“We understand a person making a claim for income protection is going through a difficult and stressful time and we aim to assess and pay every claim quickly, efficiently and with care,” TAL said.
“TAL’s complaint handling prioritises fair and efficient outcomes for all customers while identifying where we can improve, resolve issues and enhance our products and processes.”
Zurich Australia declined to comment.
Perera spruiks the benefits of IP to his clients, particularly as it protects their most valuable asset.
“Without your income, you can’t service your debts and maintain your standard of living. I think income protection is critical and probably the cornerstone of any risk management plan,” he says.
“Internally, IP comprises over a third of our portfolio. When you look at product segments, the largest being life insurance at 40% of the portfolio, IP is closely behind that. I absolutely still believe it’s beneficial for clients.” fs
11
Executive appts: Future Fund, Mercer Super, Sequoia
12
Feature: Private credit
Compliance spending slashed
An alarming number of licensees are spending less on compliance, a new survey from Holley Nethercote shows, but a slew of reforms slated within the next 18 months could catch them off guard.
Out of the 179 AFS Licensees and 29 credit licensees surveyed, 40% spent less than $100,000 on internal compliance staff compared to 29% in 2024.
More than half (57%) spent less than $50,000 on external compliance services as opposed to 39% last year.
Holley Nethercote managing partner Paul Derham said while the decrease in spending is likely a reflection of less regulatory change during the period, this is expected to reverse in the next 18 months.
This is thanks to a “tsunami of regulatory reforms wash over corporate Australia” such as Delivering Better Financial Outcomes 2 (DBFO), AML/CTF, Privacy and Digital Assets, he said.
Under the re-elected Albanese government,
Continued on page 4
Australia tops list for job growth
Eliza Bavin
Australia recorded a significant upswing in professional job vacancies, led by the financial services sector in March, according to the Robert Walters Global Jobs Index.
The research found that professional white-collar vacancies in financial services in Australia jumped by 34% compared to February 2025, marking one of the strongest monthly performances this year.
The surge in job vacancies places Australia in the top position globally over the US (+28.85%) and India (+22.58%).
Robert Walters director of finance Hamish Winterbourn said it was a standout performance.
“With finance vacancies surging by 34%, we’re seeing clear momentum in hiring across key sectors—placing Australia firmly on the global stage alongside economic powerhouses like the US and India,” he said.
The research found that roles within compliance, risk management and digital
Continued on page 4
Sam Perera Perera Crowther Financial Services
By Jamie Williamson
Out of touch and on the nose
In its FY25 corporate plan, ASIC noted that one of its strategic priorities would be “monitoring the use of offshore outsourcing arrangements.”
While there are no solid figures available around the use of outsourcing arrangements currently, anecdotal evidence suggests thousands are being employed offshore for a variety of reasons by advice businesses and licensees.
In the face of increased costs and compliance requirements, outsourcing has become an effective means for many practice owners to continue offering the same level of service their clients have come to expect.
Overall, there hasn’t appeared to be any issues with this development, particularly in light of COVID-19 and how it changed the way many of us work. But could the tide be turning?
This fortnight, Financial Standard uncovered a controversial new policy at Vision Super.
The policy dictates that the fund may not engage with representatives of financial advice firms if they deem them to be located offshore. Instead, if someone is identified as being offshore, Vision Super will require an onshore
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representative to get in contact and confirm an offshore employee is acting on their behalf.
One adviser told Financial Standard that after his personal assistant, located in the Philippines, was denied access to member information by the fund, he was told the employee had been identified as being offshore. When asked how they determine when someone is offshore, he claims he was told one of the hallmarks is a “non-Australian accent.”
While adamant a person’s accent is not how they identify offshore personnel, Vision Super did not share what indicators it was using, or respond to requests to review the call transcript or whether they had reviewed the transcript themselves.
Instead, the fund defended the policy, saying it meets Privacy Act requirements and was developed in the interest of member data security.
One can only assume it was also implemented following the recent spate of attempted cyber breaches across our major funds, and also possibly as part of planning for the introduction of CPS 230 and managing third-party ecosystems. Either way, it certainly wasn’t developed in
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the interest of efficiency or in enhancing its relationships with advisers.
Surely there is a simpler way than forcing advice firms to double-handle their communications with a super fund like this? Also, how can this even be policed properly? What if I’m offshore but communicate solely by email?
This policy defeats the purpose of outsourcing, eliminating efficiency and time gains. It also does very little to endear the adviser to the fund, and at a time when many advisers are still reluctant to deal with industry funds as it is.
Given advice firms and licensees are also required to have their own protections in place to guard against data breaches, at best this new policy is further unnecessary red tape from Vision Super and at worst, a form of racial profiling.
Only time will tell now what action ASIC opts to take in relation to outsourcing arrangements but given the overarching reform agenda aimed at making advice more affordable and accessible, it would want to think long and hard before making a move. fs
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Compliance spending slashed
Continued from page 1
industry bodies are calling for the swift passage of major legislation such as Payday Super and DBFO within the first 100 days of parliament.
The law firm’s 2025 Compliance Trends Survey also asked licensees about how they manage conflicts of interest.
Two thirds of smaller businesses with up to 50 representatives said they have no conflicts of interest whatsoever.
One third of larger businesses have the same sentiment. Derham said this is despite the fact that Australia’s regulatory system works on an assumption that conflicts of interest are to be expected and managed.
Meanwhile, artificial intelligence (AI)-related record-keeping questions are top of mind for licensees. The survey found an upward trend in the use of AI to draft meeting minutes.
“Another 33% of licensees are considering but have not yet adopted AI for this purpose. This is a timely reminder that licensees are still responsible for the accuracy of documents generated by AI. Also, the audio and full written transcripts that AI creates are discoverable by ASIC or a court and captured by various recordkeeping laws,” said Derham. fs
Australia tops list for job growth
Continued from page 1
transformation were the most sought after.
Robert Walters said the demand was driven by recent regulatory changes and continued investment in digital transformation aimed at enhancing operational efficiency and customer experience.
Significant regulatory changes with CPS230 and Tranche 2 AUSTRAC have prompted organisations to bolster their compliance and risk management teams and led to an increase in available roles in the financial services sector.
“In Australia, we’re seeing a strong rebound in hiring across Financial Services and Tech, particularly as companies respond to both regulatory shifts and renewed focus on innovation,” Winterbourn said.
“Employers have started 2025 with clearer headcount strategies, which is translating into more decisive hiring.”
The tech and transformation sector also contributed to the March surge, with renewed appetite for talent in areas such as AI, cloud computing, and cybersecurity, the research found.
“The bounce-back in tech hiring is more strategic than speculative,” Winterbourn said.
“Firms are targeting key skills to support long-term growth rather than embarking on broad expansion.”
While global job vacancy growth was recorded at +31% month-on-month across all professional services, concerns remain over potential downstream impacts of recent US trade tariffs. For Australia, any slowdown in global trade could affect export-heavy industries, but domestic-facing sectors appear well-positioned to continue hiring steadily.
Winterbourn concluded: “The Financial Services and Tech sectors are particularly influenced by global trends and may see increased demand for talent if global hiring remains robust.” fs
01: Daniel Mulino minister for financial services
The quote
We stand ready to work closely with Dr Mulino through what we hope will be
a period of renewal and reform.
THREE LINE HEAD
Daniel Mulino takes over financial services portfolio
Jamie Williamson
Daniel Mulino 01 is the new minister for financial services and assistant treasurer.
He brings a great deal of relevant experience to the portfolio. With an extensive background in economic policy, he was most recently chair of the House of Representatives Economics Committee.
Mulino has previously consulted to the World Bank and the US Federal Reserve and is a former economic adviser to Bill Shorten and former Victorian premier Steve Bracks.
He holds a PhD in economics from Yale University, and also taught economics at Yale and Monash University.
In welcoming Mulino to the role, Financial Advice Association Australia chief executive Sarah Abood said she is looking forward to working with him on areas in need of reform, like the Compensation Scheme of Last Resort and the Delivering Better Financial Outcomes legislation.
“These are priorities that our members are keen to see addressed quickly by the federal government,” she said.
“It is critical that we build a healthy and sustainable financial advice community in Australia to help more Australians achieve financial wellbeing and security.”
Meantime, Chartered Accountants ANZ chief executive Ainslie van Onselen said his appointment provides an opportunity for a fresh perspective.
“We stand ready to work closely with Dr Mulino through what we hope will be a period of renewal and reform,” she said.
“We will also encourage the government to go back to the drawing board on its planned tax on unrealised gains in superannuation balances over $3 million. This policy has significant issues that need to be addressed, as it is likely to incur higher administrative costs than the revenue it will generate.”
From the super sector, the Association of Superannuation Funds of Australia outlined three key areas in which it would like to see Mulino take action.
These were improving retirement outcomes through quality advice, implementing Payday Super without delay, and working with the super sector to tackle financial abuse.
“We congratulate Minister Mulino on his appointment and look forward to establishing a positive and fruitful working relationship with him,” chief executive Mary Delahunty said.
Taking on the dual role of assistant treasurer, he was described by treasurer Jim Chalmers as an “absolutely outstanding appointment.”
“I’ve already sat down with Daniel Mulino… Overall in the portfolio the big priorities are managing this global uncertainty, making our economy more productive, building more homes, rolling out the tax cuts, providing this cost-of-living help, continuing to make progress on inflation,” Chalmers said. fs
The best (and worst) asset classes of the year
Andrew McKean
Mercer’s annual periodic table, which charts 17 major asset classes investment returns on an annual basis over the last decade, reveals that there’s few reliable themes, except that greater risk tends to be rewarded by greater return.
Equity markets, nevertheless, took poll position last year.
International equities unhedged – represented by the MSCI World ex-Australia index – topped the table with a 31.11% return.
Mercer global head of capital markets Harry Liem said equity markets delivered impressive performance last year, particularly through large-cap and growth-oriented companies.
Liem highlighted that the S&P 500 index delivered a “stellar” 25% return, buoyed by a resilient economy, corporate earnings growth and a favourable interest rate environment.
The dominance of the Magnificent Seven, which benefited from increased investment in AI, cloud computing, and digital transformation, was also significant, he noted.
Japanese equities also “performed robustly,” aided by corporate governance improvements and the shift from a deflationary to an inflationary period, he said.
Most other regions produced double-digit returns, including emerging market equities, which were bolstered by strong showing of India and Southeast Asia.
Emerging markets, however, which returned 18% year over year, lagged developed markets, “as investors fretted over the potential impact of tariffs on exports.”
European equity markets, in contrast, were “somewhat more subdued” as they experienced challenges related to the ongoing conflict in Ukraine, concerns regarding energy supply, and residual inflationary pressures.
Australian investors enjoyed higher returns from overseas assets last year, as the Aussie dollar weakened against the US dollar.
Australian equities, unaffected by currency fluctuations, pocketed an 11% return, catapulted forward by strong performance in the banking sector.
More defensive asset classes, meanwhile, had a “steady pace,” last year, Liem said.
Fixed interest markets mounted a strong recovery heading into 2024, and to some extent this continued amid stabilising interest rates and an easing of monetary policies, he said.
Australian bonds benefited from this trend, recording a 3% return for the year, outperforming global bonds.
With the Reserve Bank of Australia “reluctant to reduce rates,” cash returned 4.5%.
The property sector faced challenges last year, particularly in the office space segment. fs
HCF Life fined $750k for term
HCF Life Insurance has been fined $750,000 by the Federal Court for misleading the public about a pre-existing condition term under its Recover products.
Last October, the court ruled the term would deny coverage if a customer did not disclose a pre-existing condition before entering the contract, and a medical practitioner subsequently formed an opinion that signs or symptoms of the condition existed prior to the customer entering the contract, even if a diagnosis had not been made.
Judge Jackman also found that HCF Life could deny coverage even if the customer was not aware of the pre-existing condition when entering into the insurance contract and a reasonable person in the circumstances would not have been aware of the condition.
Justice Jackman said whilst HCF Life had no intention to engage in misleading conduct, “the contravening conduct should be regarded as objectively serious.”
He added that “insurers are now squarely on notice that contractual terms may mislead consumers if the operation of those terms is modified by, or inconsistent with, provisions of the [Insurance Contracts Act 1 984 (Cth)]”.
In a win for ASIC, deputy chair Sarah Court said: “ASIC brought this case to ensure consumers were not misled about their rights and the extent of their cover by HCF Life’s preexisting condition term. The court’s findings and penalty handed down should serve as a message to insurers of their responsibility to ensure the information distributed to consumers is accurate and consistent with the law.”
Judge Jackman agreed that HCF Life pay 50% of ASIC’s costs up to 28 October 2024. fs
Prime Super to change fees
Prime Super has announced changes to its administration fees and costs, which will take effect from 1 July 2025.
For accumulation accounts, the fixed administration fee will decrease from $1.53 per week (subject to a 15% tax rebate) to $1.50 per week, with the tax rebate removed. The assetbased administration fee will fall from 0.588% per annum (0.500% net after tax rebate) to 0.33% per annum, but the annual fee cap will increase from $588 ($500 net) to $825.
For pension accounts, including transition to retirement and retirement products, the fixed fee will remain at $1.30 per week. The assetbased fee will decrease from 0.500% per annum to 0.33% per annum, while the annual cap will increase from $500 to $825.
Prime Super said the changes mean the assetbased administration fee will be reduced across all account types, while the fee cap will be raised.
For Accumulation accounts, the fixed fee will also be reduced and the tax rebate removed.
Earlier this year, Prime Super chief executive Raelene Seales told Financial Standard that the fund was prioritising an evaluation of whether its fees - which she acknowledged are among the highest in the market - are appropriate. fs
01: Grant Hackett chief executive Generation Development Group
BlackRock takes stake in Generation Life parent
Andrew McKean
BlackRock will acquire a minority stake in Generation Development Group (ASX: GDG), forming a strategic partnership with its retirement income subsidiary Generation Life to “set a new standard for managing longevity and sequencing risk.”
Joint working groups between BlackRock and Generation Life are already active but new retirement income solutions are expected to be launched over the coming year.
... this strategic alliance enables BlackRock to contribute to the development of the retirement income sector in Australia at a time of increased client and policymaker focus.
The partnership comes amid the government’s focus on the Retirement Income Covenant and the ongoing issue of many retirees being wary to spend their savings due to a fear of outliving their capital. This cautiousness results in under-spending in retirement and increased financial insecurity among older Australians, Generation Life said.
GDP has also recently entered the ASX 200, which was announce in a quarterly update that reported record inflows across its managed accounts and investment bonds businesses.
BlackRock’s head of Australasia Jason Collins said the firm’s investment in GDG will provide the best of its global retirement expertise and technology to the local marketplace through a proven innovator.
“By combining Generation Life’s technical expertise and product structuring capabilities with BlackRock’s scale in technology and in-
vestment management, this strategic alliance enables BlackRock to contribute to the development of the retirement income sector in Australia at a time of increased client and policymaker focus,” Collins said.
Generation Development Group chief executive Grant Hackett 01 , meanwhile, said that BlackRock’s investment will strengthen commitment to reshaping retirement income through innovation, continuing to build market-leading solutions, while also creating value for financial advisers and shareholders.
“This strategic alliance validates our proven track record and builds on the strong momentum Generation Life has achieved in recent years as we continue to expand our capabilities and grow our presence in the financial advice and retirement income sector,” Hackett said.
Generation Life noted that Australia ranks fourth in the world for life expectancy, and that Australians over 50 now control 69% of the nation’s $4.2 trillion in superannuation assets. Nevertheless, it pointed out that around 84% of Australian retirement savings are in account-based pensions with minimal longevity protection.
Generation Life touted that the partnership marks a transformative step in its group’s growth strategy, following its acquisitions of Lonsec last year and, more recently, Evidentia. fs
Former financial adviser charged in alleged $160k super fraud case
Former financial adviser Abdullah Popal has been charged with alleged fraud offences in Sydney’s north-west, accused of hoodwinking five individuals out of over $160,000 from their selfmanaged super funds (SMSFs).
A statement from Police NSW said officers began an investigation after five individuals reported unauthorised access to SMSFs in November last year. On May 6, police executed a search warrant at a residence in Rouse Hill, where Popal was arrested and subsequently taken to Riverstone Police Station.
He was then charged with five counts of dishonestly obtaining financial advantage by deception.
He was granted conditional bail to appear at Blacktown Local Court on June 16.
According to the Financial Advisers Register, Popal first provided financial advice in 2004 and was previously an authorised representative for Alpha Investment Management from April 2014 to March 2016.
During this period, he was licensed to advise on SMSFs, though restricted from providing advice on limited recourse borrowing arrangements or setting up SMSFs.
His financial adviser status is now listed as “ceased” and he isn’t currently registered.
The exact date his registration ceased isn’t clear, but his last recorded appointment ended nearly nine years before the reported offences began.
Popal founded Wealth Street in 2020 with John Zada, specialising in property investment.
The company employs a string of former rugby league players including Sam Burgess, George Burgess, and Luke Burgess, and Liam Knight in various roles, however, there’s no suggestion of any wrongdoing on their part.
It touts that its founders are passionate about educating Australians on reducing debt, minimising tax, growing wealth, and retirement planning.
Popal’s biography, once featured on Wealth Street’s website, has since been removed. fs
The quote
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
01: Martin Rea senior consultant JANA Investment Advisers
Catastrophe bonds
Why they’re gaining ground with institutional investors
Recent market volatility is a timely reminder of the value of investments that move independently of interest rates and broader market moves. As the search for resilient, uncorrelated returns intensifies across institutional portfolios, catastrophe bonds (Cat Bonds) are emerging as a structurally sound and increasingly attractive asset class. In an environment where traditional beta is less reliable and economic headwinds persist, Cat Bonds provide a compelling source of diversification and income for superannuation funds and other institutional investors.
Cat Bonds sit within the broader Insurance-Linked Securities (ILS) universe and are structured to transfer extreme weather and disaster risk from insurance companies to capital markets. Given their distinct link to specific catastrophic events rather than economic conditions, it’s hardly surprising that cat bonds have a unique risk-return profile. One of their defining features is their detachment from macroeconomic factors. Whether equity markets rally or crash, the path of a hurricane remains independent-making Cat Bonds a rare example of true non-correlation.
Diversification and risk characteristics
Because natural catastrophes are uncorrelated to economic cycles, Cat Bonds provide portfolio-level tail risk mitigation and yield enhancement. Investors are compensated via insurance risk premiums, which have risen in recent years as climate risks and exposure levels increase.
Australian superannuation funds and highnet-worth investors have increased allocations to Cat Bonds and related ILS strategies, drawn by their diversifying potential and return profile. The combination of strong yields, climate thematics, and non-correlation to traditional asset classes has seen Cat Bonds become a valued alternative allocation.
Strong market backdrop
JANA identified the improving outlook for Cat Bonds in early 2023. Since then, performance has been strong, with the Swiss Re Cat Bond Index returning 19.69% in 2023 and 17.29% in 2024. Elevated yields (averaging 12-14%) and careful structuring, including higher attachment points, have helped insulate the market from rising catastrophe activity.
A constrained capital environment continues to support spreads, and with reinsurance demand increasing, we expect these conditions to persist through 2025.
Recent events: Hurricanes and wildfires
Assessing climate change, and the potential for more frequent and severe natural catastrophes, becomes a prudent part of assessing the Cat Bonds investment case. The past year has provided a good case study in the evolving risk backdrop for Cat Bonds. Hurricane Milton made landfall in Florida in October 2024. While initial estimates suggested US$100 billion in economic losses, the final insured loss was closer to US$30 billion, with Cat Bond impacts contained to just 1-3%.
In January 2025, superannuation funds were closely monitoring the potential fallout from the Los Angeles wildfires. As of April 2025, insured loss estimates have been revised upwards to between US$35 billion and US$50 billion, making them the most expensive wildfires in U.S. history. Despite this, most Cat Bond investors had limited direct exposure to wildfire risk, and portfolio structures have remained resilient.
California’s insurance market continues to face challenges, with regulatory constraints and heightened climate risk leading many insurers and ILS managers to scale back wildfire exposure. These developments are reinforcing shifts in underwriting standards and structuring preferences across the market.
Still, California’s insurance market remains under pressure. Regulatory constraints and rising climate risk have driven insurers and ILS managers to reassess their exposure, contributing to changes in underwriting standards and structuring preferences.
Structurally evolving instruments
The ILS market includes Cat Bonds, Collateralised Reinsurance, ILWs, and Sidecars. Cat Bonds remain the most transparent and liquid segment. Over the past two years, managers have favoured higher attachment points and loss-remote structures to reduce frequency risk. These structural changes have improved portfolio resilience and supported consistently positive returns.
Medium-term outlook
The 2025 Atlantic hurricane season in North American is expected to be active, according to Colorado State University’s 3 April 2025 forecast. The University team predicts 17 named storms, nine hurricanes, and four major hurricanes-above the 19912020 averages.
Climate change, inflation in construction costs, and urban development in high-risk
The quote
Their low-frequency, high-severity profile requires disciplined sizing and diversification. JANA advises capping exposure at 5% of portfolio assets, or lower for new investors.
regions continue to push premiums higher. These conditions, combined with capital scarcity, are supporting robust spreads in the ILS market.
Cat Bonds are also gaining ESG recognition. The EU’s SFDR recognises them as supporting climate adaptation by pricing climate risk. This adds to their appeal for investors aligning portfolios with sustainability goals.
Risk management considerations
Despite strong recent returns, Cat Bonds are not without risk. Their low-frequency, high-severity profile requires disciplined sizing and diversification. JANA advises capping exposure at 5% of portfolio assets, or lower for new investors. Liquidity also deserves scrutiny. Market stress during large events could challenge liquidity. Monitoring manager quality and fund terms is key.
Conclusion
Cat Bonds offer institutional investors a rare combination: strong yields, true diversification, and climate relevance. While near-term risks must be managed, the broader market context supports a strategic allocation.
For superannuation funds and other longterm asset owners, Cat Bonds provide a resilient, income-generating alternative that complements traditional risk assets in a world increasingly shaped by climate extremes. fs
The Podcast
Bringing you the latest news and thinking in wealth management.
Executive appointments
Future Fund expands leadership
Future Fund has appointed a chief financial officer and chief risk officer, as well as a chief people, culture and inclusion officer.
Nancy Collins 01 is joining the Future Fund Management Agency in the finance and risk role from Swinburne University of Technology. There, she has served as chief operating officer since December 2019.
She’s previously held senior roles at Burra Foods, Bega Cheese, and Tatura Milk Industries.
The sovereign wealth fund said her appointment is part of a strategy to “mature the Agency’s senior leadership capabilities” in line with the growing size and complexity of the fund.
“After an extensive search process, I am delighted that we have recruited an executive of Nancy’s calibre and experience to be the Agency’s chief financial officer and chief risk officer,” Future Fund chief executive Raphael Arndt said.
Future Fund made a series of other changes, including adding Simone Hartley-Keane as chief people, culture and inclusion officer. She replaces Kimberley Reid, who retired at the end of last year.
She joins from Maurice Blackburn Lawyers where she held a similar role. She also brings senior experience at Pacific National, GE Capital, and Country Road.
Meantime, the fund also appointed Gillian Denison to general counsel. She will take over following the departure of Cameron Price, who held the role for 11 years.
Global X recruits key executives
Global X ETFs Australia has appointed a head of operations and finance lead and will shortly hire a senior business development manager to boost growth efforts in Western Australia.
The exchange-traded fund provider’s operations lead, Steven Romei, has a strong track record in scaling operational frameworks, including product operations, risk and compliance and change management.
Romei joins from State Street Global Advisors. He previously held senior roles at Vanguard, where he was responsible for the operational oversight of the personal investor platform and fund accounting.
The ETF provider has also appointed Brianna Fallins head of finance, promoting from within.
Having been with the company for just over two years, Fallins has played a pivotal role in Global X’s financial planning, forecasting, and reporting and will now oversee all aspects of the company’s financial operations.
Fallins previously worked at Christopher Joye’s Coolabah Capital Investments.
NZ Super names operations chief
The Guardians of New Zealand Superannuation, manager of NZ Super Fund, has promoted Paula Steed 02 to the newly created position of chief operating officer.
The appointment combines Steed’s current role of general manager technology and general manager strategy and shared services.
As the inaugural chief operating officer, Steed will be responsible for the organisation’s investment operations, financial control, financial reporting, tax, external audit process, and corporate strategy.
Steed will also spearhead its business solutions, cloud operations, data technology, cyber security, and service desk, the fund said.
Steed joined the super fund as its general manager in finance and investment operations in 2021. She was also the general manager in strategy and shared services in 2022 and the acting chief executive between December 2023 and April 2024.
Longview Partners sets up local shop
A former Apostle Funds Management global distribution lead has been named head of APAC and Middle East for a London-based firm.
The newly created role will see Kimon Kouryialas 03 lead Longview Partners’ growth strategy in the region.
Kouryialas is tasked with expanding Longview’s institutional and wealth management platform, focusing on its global equity strategy, the firm’s single product offering.
Up until now, Longview chief executive Marina Lund has covered the local institutional market.
Before his 12 months at Apostle, Kouryialas spent 15 years at Martin Currie Investment Management, the active equity specialist sitting within Franklin Templeton.
For four years, he served as co-head of global distribution, managing sales and client services activity across Asia, Australia and the Middle East.
Aware adds UK private equity lead
The $190 billion superannuation fund has recruited Frank Bulman to lead its private equity team in Europe along with two associate portfolio managers for infrastructure and property investment.
Reporting to Jenny Newmark, Bulman arrived at Aware Super from Park Town Equity Partners, an investment vehicle he co-founded to pursue co-investment deals.
With over 25 years of experience, he has held senior roles at Averroes Capital and RJD Partners, where he led teams investing in European lower mid-market buyout opportunities.
In his role, Bulman will work with Aware Super’s established European private equity manager relationships as a strategic capital partner for both co-investments and co-underwriting opportunities.
He is also charged with developing new relationships across Europe and North America and will sit on the global PE investment committee.
Mercer Super welcomes risk chief
Mercer Super has confirmed the appointment of Dennis Gentilin - an ex-banker turned whistleblower - to the role.
“Dennis’ expertise and leadership will help us further strengthen our risk culture and practices,” a Mercer Super spokesman said.
Gentilin lost his job as UniSuper’s head of enterprise risk last August following a restructuring of its risk function. He was with UniSuper for three years. At the time, Gentilin called his redundancy “disappointing” and returned to consulting.
Speaking of his new role at Mercer Super, the incoming risk lead said he was “honoured” to be appointed chief risk officer at such a pivotal moment in the entity’s history.
Before working at UniSuper, the risk specialist spent three years at Deloitte and 16 years at National Australia Bank.
Interestingly, Gentilin is the author of The Origins of Ethical Failure, which he penned as a young trader at NAB. During his time with the lender, he blew the whistle on a major foreign exchange trading scandal that saw four of his co-workers on the dealing desk go to prison.
Sequoia hires from AMP
Sequoia Financial Group has appointed Daryl Stout 04 as head of licensee and adviser services. Stout will report directly to chief executive Garry Crole and will be responsible for growth, operational excellence and adviser engagement. Most recently, Stout was national business growth manager at AMP Advice where he rebuilt recruitment processes, launched adviser-facing digital assets and executed national roadshows to attract external advisers.
Prior to AMP, Stout held transition and growth roles with MLC Advice/Insignia Financial and MLC Partnerships, where he led the integration of more than 400 advisers during the NAB divestment.
“Daryl has a proven track record in adviser engagement, licensee operations, practice development, and M&A support,” Sequoia said.
“His extensive industry knowledge and leadership experience will be instrumental in strengthening Sequoia’s licensee services and supporting our national growth ambitions.” fs
01: Nancy Collins
02: Paula Steed
03: Kymon Kouryialas
04: Daryl Stout
The surging private credit sector is attracting a great deal of scrutiny, and it’s not without reason. While not all offerings are created equal, the investment case remains strong – as well may the case for regulatory intervention. Matthew Wai writes.
The last two years has seen private credit dominate; it’s all anyone wants to talk about, and its growth and performance gives them good reason to.
But there have been other reasons emerge, too – like the sector’s opacity, lack of regulation, and poor quality of asset valuations, to name a few.
Even attempts to set the scene in terms of the sector’s size can prove contentious, with numbers differing across sources.
For instance, as at October 2024, the Reserve Bank of Australia estimates the sector to be about $40 billion, which excludes non-syndicated direct lending by super funds. EY, however, believes it is worth more than four times this, pegging it at around $188 billion.
And then there’s the Australian Investment Council and Preqin, whose Yearbook 2025 says there was just $2.7 billion in closed-end market in September 2024, while the openended was about 10 times that. Or Alvarez and Marsal, which estimated $205 billion at the end of 2024.
Regardless, this upward trajectory has landed the sector firmly in the crosshairs of the Australian Securities and Investments Commission (ASIC).
“As Australia’s financial markets regulator, ASIC is foremost committed to ensuring the strength and integrity of both private and public capital markets. Public and private markets support one another, and we are approaching our consultation from both an opportunity and risk perspective,” ASIC told Financial Standard
“As outlined when we launched the discussion paper in February, a critical point for ASIC is whether there is any need for interventions to address risk or adjustment to how regulation operates to take advantage of opportunities.
“While we don’t see regulatory settings as the dominant factor here, there may be opportunities to adjust in order to improve the attractiveness of our markets.”
Other than addressing opacity, ASIC is also targeting conflicts of interest, valuation uncertainty and leverage in private
markets, referring to them as “key risks” and has increased its surveillance of fund compliance.
The heightened regulatory pressure will also “test” fund managers on disclosure, governance, valuation practices, management of conflicts of interest, credit risk management and liquidity management, ASIC says. This is primarily a result of increased marketing efforts towards retail investors.
Interestingly, many in the private credit sector are quite keen to have a spotlight to bask in; eager to work with the regulator to fortify the asset class and foster investor confidence.
For example, Tanarra Credit Partners’ Peter Szekely01 says ASIC’s involvement should be in determining minimal disclosure obligations for fund managers.
“I think in terms of requiring an appropriate level of disclosure is where the regulator should get involved. They are working to reach agreement within the private credit market ecosystem,” Szekely says.
He says the disclosure that the firm is currently providing on retail-focus products, depending on separate products, does not differ so much from the private market infrastructure.
“Part of the reason and the attractiveness of private market investment is that you’re getting access to a differentiated set of investment opportunities,” he continues.
“I don’t think it’s a bad thing that private investments are getting scrutinised… but it’s [about] understanding and agreeing to what level of disclosure we’re going to provide and is appropriate for investors. I think that’s where the regulator should play a role.”
However, Szekely warns there are consequences in enforcing a higher level of disclosure.
“You don’t want to create a huge administrative burden for managers, and I think the key points when we go through ASIC’s discussion paper are around the approach to valuations. It’s not just private credit in Australia, but different approaches to valuation methodologies are employed by each manager,” he says.
“It can be as simple as documenting how often you value
Feature | Private credit
01: Peter Szekely managing partner Tanarra Credit Partners
the portfolio, and the methodology employed, and can be different for a listed product versus an unlisted product.”
It could be questions about whether everything needs to be done internally, or whether a manager needs a third party involved in valuations, he adds.
“At Tanarra we use a third-party valuer to verify our valuation work, but not everyone does that – so it is important to have uniformity requirements,” he says.
Meanwhile, Oreana managing director of private credit Jacob Rumball 02 believes an unregulated private credit sector could deliver “large-scale capital losses”.
Despite the asset class having a 6% p.a. in compound annual growth rate, Rumball believes that “common sense” monitoring and regulation will ultimately improve transparency to ensure investors, retail and institutional, are aware of the risks within the asset class.
“Monitoring and regulation empower investors to better identify and select fund managers who can help them achieve their target investment objectives,” Rumball says.
“Hopefully ASIC can be a positive disruptor in the Australian private credit sector. Investors who allocate to the wrong fund managers expose themselves to risks which can and should be managed and mitigated.
“These include over deployment of lending to quickly build portfolios, liquidity mismatches, thin underwriting, and a lack of capability with respect to being able to step in and manage stressed underlying projects (particularly in real estate focused private credit).”
Further, compared with other parts of the world, Coller Capital partner Martins Marnauza 03 believes more liberty around the private sector would always be favourable.
“I personally believe in the libertarian to handle the thoughts and economics,” Marnauza says.
“I think it is important to note that it is not obvious to me that the alternatives would benefit from additional regulation.
Jacob Rumball managing director, private credit Oreana
03: Martins Marnauza partner Coller Capital
With every asset class, you have good operators, and then you have some that are not so good. In this particular asset class, when things go wrong, they can go very wrong indeed.
Louis Christopher
“I don’t see that there is a systemic risk for the broader economy from private creditors.”
If regulators are set to step in, they should aim to produce more “optical outcomes”, or if they step off the gas, that could lead to a more efficient market, he notes.
Double-edged sword
Soon after ASIC’s announcement, SQM Research tightened its monitoring of the private credit sector, though SQM Research managing director Louis Christopher04 says putting the asset class on watch was not an entirely reactionary response to the regulator’s move.
“Firstly, what we’ve observed in the market has made it somewhat uncomfortable in terms of certain instances with managers looking to get a rating,” Christoper says.
“And secondly, in part, and only in part, a response to recent announcements made by financial regulators.”
Frequent monitoring and oversight can help investors by improving transparency – something that SQM Research would like to see, fostering better disclosure, and spotting underperforming strategies.
Christopher believes transparency among sophisticated investors in the sector should be of the same level as for the retail investors.
“I think greater transparency means that
there’s less shadows to hide weak operators, and that’s important,” Christopher says.
“With every asset class, you have good operators, and then you have some that are not so good. In this particular asset class, when things go wrong, they can go very wrong indeed.
“It’s important to note that transparency is essential, but oversight is also important to ensure that we can reduce the risk of funds ‘freezing up’.”
The research house’s rating scheme acts as an important catalyst as the “initial screening” for advisers but has its limitations.
“Ratings are a part of the initial screen that advisers use but we strongly advocate that advisers and dealer groups, as well as platforms, do additional due diligence over and above a rating,” Christopher stresses.
“[However,] we’re not, for example auditors. We’re here to rate and research the investment capability of a manager and the merits of a product as it’s presented to us.
“We’re not here to do audits on loans; that goes beyond our expertise.”
However, from an adviser’s point of view, the amped up monitoring can lead to both positive and negative outcomes.
Integro Private Wealth adviser Nada Maticevic 05 says increased scrutiny also signals a tightening of regulatory oversight, which can be a “double-edged sword”.
“On the one hand, it protects investors and ensures higher standards across the board. On the other, it places more responsibility on advisers to validate product governance, stress test scenarios, and maintain rigorous documentation,” Maticevic says.
“Advisers will likely need to invest more in compliance frameworks, research capabilities, and potentially lean more heavily on third-party due diligence providers to mitigate regulatory risk.”
On top of that, navigating the regulatory environment around private credit remains complex and is becoming increasingly demanding.
“The lack of standardised disclosure and valuation requirements means advisers must conduct extensive due diligence, often relying
02:
Figure 1. Business lending outstanding as at August 2024
on less transparent or standardised data,” Maticevic continues.
“This not only raises the bar for compliance but also requires a deeper understanding of the underlying structures, risk profiles, and liquidity terms of each offering.”
This creates a dual challenge in ensuring compliance with the Corporations Act while also fulfilling duties under ASIC’s regulatory framework.
“However, within that segment, there’s growing interest due to the consistent yield profile and low correlation to listed market,” she reiterates.
“The challenge is managing client expectations – particularly around liquidity and risk –and ensuring they understand the bespoke nature of these investments.”
For retail clients specifically, Maticevic says inaccessibility can often be frustrating, but that it’s also a reason why education remains prudent, particularly around the nuances of the asset class.
Nevertheless, increased transparency is both “necessary and positive”, particularly if retail access to private credit is to expand.
“Clearer reporting, improved fee disclosure, and consistent risk metrics will empower advis-
tion of being a sophisticated investors is that they know what they’re doing,” he elaborates.
However, this is often not the case. In a submission to the Parliamentary Joint Committee in May 2024, ASIC proposed changes to the guidelines.
“The financial thresholds used in these tests have not been increased since their introduction into the Corporations Act in the early 2000s,” ASIC stated in the submission.
“The failure to increase the thresholds over time has meant that the wholesale tests have become easier to satisfy, resulting in a much larger number of investors meeting the tests, including many who may not be financially sophisticated or wealthy by today’s standards, undermining the original policy intent.
“These changes have resulted in investors who may not have financial knowledge or experience, a high net worth by today’s standards or a highrisk appetite being classified as wholesale.”
It’s estimated that just 2% of investors were qualified as wholesale when the test was first introduced. This has since grown to 16% on the back of property price increases.
The private credit market does not appear to be systemically important in Australia, but failures are possible, and at current volumes it is untested by prior crises – regulators need information to consider the risks and plan responses.
ASIC
ers to better serve clients and make more meaningful comparisons,” she says.
“However, transparency must be matched with education. Retail investors may misunderstand the illiquidity, credit risk.”
The right investor
While the scrutiny of private credit is ongoing, it cannot be separated from the proposed reforms to the sophisticated investor test; under the Corporation Act 2001, a sophisticated investor is described as an individual with a gross income of at least $250,000 or net assets of at least $2.5 million.
Given the heightened risk profile of such investments, there are some who feel that having an asset class that is reserved for the big end of town may not be all that bad.
“The question is, ‘are they really a sophisticated investor and do they know what they’re doing?’ I suspect there’s more and more people who qualify as a sophisticated investor, but in reality, they are not,” Christopher says.
The sophisticated investor test should “absolutely” be reformed, he says, emphasising the main issue is the criteria that qualifies one as a sophisticated investor has not changed for many years.
“The issue is that the wholesale test is meant to be set up for sophisticated investors; the assump-
The proposed changes include increasing the net asset threshold from $2.5 million to $4.61 million; and gross income from $250,000 to $461,000.
Calls for change were also backed by the Financial Services Council, which proposed a $5 million threshold. However, at the time, the Coalition made clear it planned to block the changes.
While the government said it would overhaul the test and commenced a review, later in the year it was revealed the review had been shelved until after the federal election – which took place on May 3 and saw Labor retain the leadership. It now remains to be seen when it will be revisited under the new financial services minister, Daniel Mulino.
Hitting the plateau
Despite the challenges it’s facing, the asset class has undoubtedly seen immense success in recent times. However, it’s important to note that there is still room for growth.
PGIM Private Capital managing director Michael Jones 06 says private credit is still in its “formative phase” in Australia compared to the US and European markets where penetration is much higher.
“Borrowers are still learning about the advantages of utilising more flexible private credit as
well as the ability to access debt solutions in lieu of raising equity to support both organic and inorganic growth,” Jones says.
“Investors are still able to generate strong risk-adjusted returns with private credit as an alternative to more traditional fixed income options while benefiting from the presence of covenants to protect against the downside.”
Jones believes that private credit presents as a sufficient cushion for equities, and even if the loaned business underperforms, investors are still bound for steady returns with less volatility and correlation to other assets.
Meanwhile, Szekely sees healthy growth in the sector and highlights that it is the selection of manager that remains imperative.
“Private credit from our point of view is very compelling; it’s going to vary depending on the portfolio mix from each manager but when we look at the senior secured loan in Australia today, it is at 8.5% net in returns, and perhaps in the double digits for riskier investments,” Szekely says.
“But compared to long-term equity property bond returns, it is on par with where those are.
“If a business has been valued at $100 million with 50% equity and 50% loan, until that 50% of equity value deteriorates, your loan will be protected. To get a similar return to equity, you need the equity standing in front of you to absorb any losses.”
Rumball agrees, adding that private credit as a nascent asset class in Australia is slowly maturing and will hopefully approach a similar position to where it sits in North America and Europe.
Particularly in Australian private credit, it is offering investors superior risk-adjusted returns and income as part of a balanced fixed income portfolio across both real estate and corporate lending.
“Private credit is a crucial component in the capital stack offering that allows businesses to access capital quickly with customised structures that help facilitate the strategic goals of the business,” Rumball says.
“Demand for private credit may increase or decrease over time but ultimately the asset class is here to stay and will continue to be utilised by businesses over the long term.”
Ultimately as a market regulator, ASIC told Financial Standard it is focused on understanding whether there is “a need for ASIC to intervene, or whether we leave the market and wholesale investors to their own devices.”
“The private credit market does not appear to be systemically important in Australia, but failures are possible, and at current volumes it is untested by prior crises - regulators need information to consider the risks and plan responses,” ASIC continues.
“[However,] our surveillance of private capital fund compliance will provide us with more insight. This focuses on fund governance, risk management, valuation practices, management of conflicts of interest, protection of confidential information and fair treatment of investors.” fs
04: Louis Christopher managing director
SQM Research
05: Nada Maticevic adviser Integro Private Wealth
06: Michael Jones private capital managing director PGIM
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Cbus increases life, TPD premiums
Cbus will increase insurance fees for death and total and permanent disability (TPD) cover from July 5.
Those aged between 15 and 25 will see their fees remain the same, but those in older age brackets will be paying slightly more each week.
For members working in a manual job and aged between 25 and 34, the weekly cost of death cover will rise by $0.05 per week to $1.11, while TPD will rise by $0.08 per week to $1.73.
Those between the ages of 35 and 49 will see the cost of death cover rise $0.07 to $1.52, and TPD will rise $0.12 to $2.51.
Members aged 50 and over will see death cover rise $0.10 to $2.20 and TPD up $0.15 to $3.04. The changes are slightly less for those who work in non-manual jobs. For a member aged 25 to 34, death cover will rise by $0.03 to $0.63 per week and TPD will be up $0.04 to $0.75.
Members aged between 35 to 49 will see death cover rise $0.05 to $1.53 per week, and TPD up $0.07 to $1.53.
Those aged 50 and above will see the cost of death cover rise $0.09 to $1.82, and TPD up $0.09 to %1.91. Premiums for members in the electech category will remain the same.
Cbus said the change comes after an annual review of fees and discussions with TAL Life, which is the fund’s group insurance provider. fs
Ascent engineer cops charges
Karren Vergara
Michael Dunjey, the mastermind behind a $149 million alleged Ponzi scheme, has been changed with 33 criminal offences.
On May 9, the Perth Magistrates Court charged Dunjey, the director of Ascent Investment and Coaching, with 23 counts of fraud under section 409 of the Criminal Code 1913 (WA). These amounted to more than $4 million in investor funds.
Five counts relate to failing to act in good faith under section 184 of the Corporations Act 2001, amounting to about $2.5 million of investor money.
Another five counts relate to falsifying books and annual returns under section 1307 of the Corporations Act 2001.
In 2021, ASIC sought freezing orders against Dunjey, alleging at the time he operated without a licence and falsified financial records. He was also forced to surrender his passport and remain in Australia. Ascent owed some $149 million to clients and had $4 million in assets.
The following year, the Federal Court appointed Matthew Donnelly and Sean Holmes of Deloitte Financial Advisory as provisional liquidators of Ascent.
In 2023, the Federal Court then ordered Ascent to be wound up on just and equitable grounds, together with the managed investment scheme it operated.
Dunjey was the sole director and member of Ascent. April 2023 Federal Court documents show that it was “very likely that Mr Dunjey and Ascent operated a ‘Ponzi’ scheme.”
In Ascent’s 2020 financial statements and tax return, which was described as a “discretionary trust – investment activities”, the company reported net income of $8.8 million and assets of $117.5 million. fs
executive Financial Advice Association Australia
Reducing super tax cap to $2m ‘a concern’: FAAA
Eliza Bavin
Financial Advice Association Australia (FAAA)
chief executive Sarah Abood01 has voiced concerns about the future of Div 296, given Labor’s overwhelming victory at the federal election.
The proposed 30% tax on superannuation balances above $3 million could see the threshold reduced to $2 million if the Greens get their way.
The quote They’ve looked for the threshold to be reduced to $2 million from $3 million.
“It will be the Greens, most likely, that Labor will negotiate with in the Senate, and they have asked for further changes. They’ve looked for the threshold to be reduced to $2 million from $3 million,” Abood said.
“So that will obviously catch quite a lot more people. They’re also looking for a ban on lending in self-managed super funds on property.”
Abood said lowering the threshold will put many more retirees at risk, including those who are farmers and small business owners that may keep their businesses and property within an SMSF.
“They will likely be really challenged by this, and it may force sales of some of those assets in order for the tax bill on unrealised gains to be paid. So, we do have some concerns,” she said.
In relation to the new minister appointment, the FAAA said it intends to hand over a long list of “critical” advice reforms.
Abood said after engaging with members, the five key asks of the new financial services minister will be to fix the Compensation Scheme of Last Resort (CSLR); provide advisers access to the ATO portal; deliver effective Delivering Better Financial Outcomes (DBFO) reforms and implement a standardised fee consent form; instigate a financial services “razor-gang” to cut red tape; and support new entrants to the financial advice profession
“Fixing the CSLR in particular, fixing the funding model to ensure that it’s sustainable, and it’s fair, that is absolutely our number one priority. It has been for a while and will remain top of our list for the new minister to be addressing,” Abood said.
“The other high priority issue, of course, is DBFO. The legislation is half there. We’ve talked about cutting red tape. The first tranche of reforms were aimed at trying to help that situation, but there’s no doubt that there’s still a hell of a lot of work to do there to get rid of unnecessary red tape.”
De-regulation has been a sticking point for the industry, with SMSF Association (SMSFA) chief executive Peter Burgess agreeing that the complexity behind the DBFO reforms undermines the core policy objectives.
The SMSFA urged the government to reconsider key aspects of its proposed financial advice reforms, cautioning that consulting on key reforms in isolation risks increasing complexity, red tape and the cost of providing financial advice, undermining the core policy objectives.
“While we support reforms that aim to increase access to affordable, quality financial advice, these measures must be implemented collectively, not piecemeal, and they must maintain a level playing field for all advice providers — including the many small businesses serving SMSF trustees,” Burgess said.
“The Association is concerned about the proposed collective charging model that allows large superannuation funds to deduct advice costs from member accounts — a luxury not available to financial advisers, who must charge clients directly and meet strict disclosure requirements.” fs
Clime awarded $183m mandate from US firm
Clime Investment management has been awarded a $183 million (US$117 million) mandate as the primary manager of a pending US domiciled public offer fund by Sphinx Investments. Subject to regulatory approval, Sphinx will allocate $183 million (US$117 million), and subject to an agreed investment strategy, will continue to allocate between 15% to 20% of Sphinx investors to the vehicles managed by Clime on an ongoing basis.
In addition to the retail offering, which is pending SEC approval, Clime has established a specialist wholesale/ sophisticated equivalent offering for clients of Sphinx.
The investment option has $7.3 million (US$4.7million) of committed capital and pre-commitments of $47 million (US$30million). Commencement of the offering is subject to Clime’s own legal and compliance review.
Clime said it was awarded the mandate after Sphinx met “challenges” in identifying a “capable and right-sized” partner in the Australian market. To meet the requirement, Clime said it “rapidly” assembled a legal, governance and execution team to address the objective of Sphinx.
To meet requirements Clime established a series of exempted limited partnerships. The structures are not open to Australian investors, but Clime said wholesale, unlisted funds with similar characteristics are available to wholesale Australian investors.
The agreed investment strategy mandates Clime to manage a series of investments in Australian real property, unlisted and listed Australian credit, unlisted private equity and Australian listed companies.
If approved, the initial retail offering is expected to grow Clime’s revenues by approximately $1.75 million in the next 12 months. Wholesale investment offers are expected to grow revenues by $350,000.
Additionally, Clime has entered into a heads of agreement with Dallas-based US equities manager Acruence Capital to strengthen both entities’ research capabilities and collaborate on opportunities in the US market.
The agreement with Acruence is expected to increase investment capability and resourcing for Clime’s international investment team without a material change to revenue or expenditure. fs
01: Sarah Abood chief
Platinum to lose $1bn mandate
Jamie
Williamson
Platinum Investment Management lost a sizeable institutional mandate at the start of the month.
The ASX-listed manager disclosed it received notice that an institutional mandate worth about $958 million was to be terminated. The termination is to take effect from May 9.
“The impact to profit of the related loss of revenue will be offset by an acceleration of planned cost savings to be delivered in FY26,” Platinum said. Reporting to the ASX, Platinum recorded total funds under management as at April end of $9.64 billion. This figure includes the mandate that has now been terminated, the loss of which will show up in the May numbers.
In April, Platinum saw net outflows of about $243 million, including $215 million from the Platinum Trust Funds. The balance was the result of market movements.
The mandate loss follows the news that Platinum is seriously considering merging with L1 Capital.
L1 Capital recently bought 9.6% of Platinum from its founder Kerr Neilson. Including a call option, if a competing offer is made for Platinum, L1 Capital’s share would effectively rise to 19.9%.
Under the planned deal, Platinum would acquire L1 Capital and in return L1 Capital’s shareholders would own 75% of Platinum’s shares, with existing shareholders owning the balance. Platinum explained that this accounts for the combined entity receiving participation in performance fees related to the first 5% of absolute returns from the L1 Long Short funds. fs
Rainmaker Mandate top 20
Alvia scoops up majority stake in ice cream cone maker
Andrew McKean
Alvia Asset Partners has acquired a majority stake in Altimate Foods, Australia’s largest ice cream cone manufacturer, in partnership with the company’s founding Rizzo family.
The quote
Our investment in Altimate exemplifies our disciplined, long-term investment philosophy, where we focus on businesses with strong fundamentals and resilient profitability.
According to Alvia, Australia’s ice cream market has more than doubled in value since 2012, now exceeding $1.5 billion.
The family office also reported a 41% increase in “indulgent products” over the past year.
The firm said that the demand for comfort, nostalgia, and small luxuries continues to rise, and that ice cream cones remain a key beneficiary of this enduring trend.
The private capital sector in Australia is estimated to be worth $200 billion.
Browne said Altimate typifies much of its investment strategy as a business with strong market position, high-quality and great-value products, and a first-class management and founder team.
Alvia chief executive Nathan Robertson 01
said the firm achieves true alignment by personally investing alongside its clients in every opportunity.
Robertson said this ensures the firm’s own success is intrinsically tied to the outcomes it delivers for clients, adding that this fosters a culture of accountability, capital preservation, and long-term value creation.
“Our investment in Altimate exemplifies our disciplined, long-term investment philosophy, where we focus on businesses with strong fundamentals and resilient profitability,” he said. Altimate was founded in 1993 by three brothers Joe, Pat and Michael Rizzo, alongside their father Frank. Its products are sold in over 3600 locations, including Woolworths, Coles, Aldi, QSR chains, and independent ice-creameries.
Altimate managing director and founder Joe Rizzo said the business anticipates significant growth as it continues to provide an “affordable indulgence” for consumers. fs
Managed funds
When cash is no longer king
Lukasz De Pourbaix, head of strategic sales and solutions, Fidelity International
With markets correcting and interest rates falling as economic growth slows, investors may need to adapt their investment strategies as economic conditions change. As global inflation moderates, various central banks, including the Reserve Bank of Australia, have begun to cut official cash rates.
If inflation continues to moderate, interest rates are likely to fall even more in Australia. In this environment, while bonds are not a replacement for cash, they can play an increasingly important role within a diversified portfolio by providing yield, the potential for capital gains and diversification.
Constructing a defensive portfolio typically requires a balance between generating yield, diversifying investments, and managing risk. Traditionally, such a defensive portfolio consists of three core building blocks: cash, duration (government bonds), and credit or corporate bonds. These assets offer a spectrum of riskreturn profiles, ranging from cash to higher-yielding but riskier assets like high-yield and emerging market bonds, which tend to exhibit a stronger correlation with equities. Duration fixed income assets, specifically bonds, have been relatively unloved in recent years. During the era of quantitative easing, bonds offered negligible yields while inflation rose rapidly. Furthermore, bonds were also volatile and failed to provide the diversification benefits that
equity investors had come to expect. This led many to question the value of bonds in portfolios.
However, in the current economic climate, where inflation is moderating and interest rates are expected to decline further, it may be an opportune moment to reconsider an exposure to bonds, especially for investors with little or no bond allocation.
There are three good reasons to consider incorporating bonds into a diversified portfolio: diversification, yield and capital return, and valuations.
Turning to the first reason, one of the key functions of bonds in a portfolio is to act as a stabilising force, providing diversification from equities. During the shift from a lowrate, low-inflation environment to one of higher rates and higher inflation, bond market volatility increased significantly as markets adjusted. This resulted in a higher correlation between equity and bond markets than usual, diminishing the ability of bonds to protect against downturns in equity markets.
However, as inflation has moderated, volatility in bond markets has decreased and the correlation between equities and bonds has fallen. This reinforces the diversification benefits that bonds now offer relative to equities. A review of the rolling 60-day correlation of the S&P 500 and US Treasuries demonstrates that as inflation has moderated, equity-bond correlations have fallen substantially, underscoring the potential diversification benefits of bonds.
In terms of yields and capital return, bond yields have
increased sharply since 2020. For instance, US 10-Year Treasury Bond Notes, which yielded below 1% per annum in 2020, were yielding over 4% per annum in the middle of March 2025, in Australia and the US. Furthermore, if inflation continues to moderate and interest rates continue to fall, duration assets like bonds should benefit from capital gains, as bond prices generally rise when interest rates fall.
The third reason to invest in bonds is that they now offer good value compared to other segments of the fixed income market. For example, US Treasuries are trading at a significant discount relative to corporate bonds and high-yield assets. While asset prices can fluctuate over the short to medium term, valuation has historically been an effective measure for assessing the future value of an asset.
Given the potential benefits of bonds in a moderating inflation and falling interest rate environment, investors should consider a strategic allocation to this asset class. This involves carefully assessing the appropriate level of bond exposure based on an investor’s risk tolerance, investment objectives, and time horizon.
Within the fixed income universe, government bonds, such as US Treasuries, stand out as being attractively priced. Government bonds are trading at a significant discount compared to other fixed income assets and equities, suggesting that they may offer compelling value for long-term investors. Furthermore, government bonds are generally considered to be less
than
BALANCED INVESTMENT OPTIONS
International
TWG invests in Mubadala Capital
Sovereign-backed asset manager Mubadala Capital has given a 5% stake to TWG Global, and, in return, the former will lead a $15.6 billion syndicated investment in the holding company.
Mubadala Capital and TWG Global have entered a “strategic investment alliance” to drive long-term value creation.
TWG Global has interests across financial services, insurance, AI and technology, sports and entertainment, and energy. It has an enterprise value of over $62 billion (US$40bn), and its portfolio includes sports franchises such as the LA Dodgers, LA Lakers and Chelsea FC. Meantime, Mubadala Capital is the alternatives division of the $515 billion (US$330bn) Abu Dhabi sovereign wealth fund Mubadala Investment Company.
Under the deal, Mubadala will anchor and lead a $15.6 billion (US$10bn) syndicated investment in TWG Global as part of a broader $23.4 (US$15bn) equity raise – proceeds of which will be used by TWG to “capitalise on its attractive set of proprietary investment opportunities.”
Meantime, TWG will commit $4 billion (US$2.5bn) Mubadala Capital’s products and plans to increase commitments from itself and other partners and clients over time, up to $31 billion (US$20bn).
TWG Global’s Mark Walter said: “The convergence of business and new technology is creating unprecedented investment opportunities. This collaboration enhances our ability to capitalise on that opportunity set and provides us with additional access to world-class investment strategies.”
Meanwhile, Mubadala Capital managing director and chief executive Hani Barhoush said: “By combining our institutional expertise and capital resources through this unique alignment of interests, we are strengthening our joint abilities to access and scale high-quality investment opportunities globally.” fs
Federal Reserve holds rates
Eliza Bavin
The US Federal Reserve left interest rates on hold when it met overnight as it takes a “patient” stance while it awaits the inflationary impacts of US President Donald Trump’s tariffs.
The Fed noted that “uncertainty about the economic outlook has increased” and the central bank was watching the situation closely.
“In some ways it appears that the Fed is concerned at repeating the mistakes of the 1970s ‘stagflation-heavy’ environment where a premature easing of monetary policy, while inflation remained elevated, led to an extended period of economic dislocation, including high inflation, low growth and high unemployment,” GSFM investment specialist Stephen Miller said.
“While the current period is some distance from the 1970s experience, the lesson nevertheless is that it is not best practice to accommodate supply shocks, even if they are expected to be transient.”
Miller added that “sticky” inflation has robbed the Fed of the flexibility to cut rates quickly, however Federal Reserve chair Jerome Powell still asserted that the US economy is holding up relatively well despite the uncertainty. fs
01: Warren Buffet chief executive and chair Berkshire Hathaway
Warren Buffett to retire, recommends successor
Karren Vergara
Berkshire Hathaway chief executive and chair Warren Buffett 01 announced his intention to retire by the end of the year and put forth who he believes will best lead the company.
At the annual Berkshire Hathaway shareholder meeting, Buffett made the surprise announcement and recommended that Greg Abel take over his post.
The quote
The decision to keep every share is an economic decision because I think the prospects of Berkshire will be better under Greg’s management than mine.
“I think the time has arrived where Greg should become the chief executive officer of the company at year end. I want to spring that on the directors effectively and that’s my recommendation,” Buffett said.
However, Buffett flagged that he may still “hang around and could conceivably be useful in a few cases” but Abel will ultimately have the final word in terms of operations, acquisitions and capital deployment and so forth.
“Whatever it might be, I could be helpful, I believe, in certain respects if we ran into periods of great opportunity… I think that Berkshire has a special reputation that when there’s times of trouble for the government that we are an asset and not a liability which is a position that’s very hard to have, because usually the public and government get very negative on business if there’s a time like that. So, I think there might be a time when I’d be hopeful, but Greg would have the ticket,” Buffett said.
Abel is the chair and chief executive of Berkshire Hathaway Energy, joining the group in 2000.
He has served as Berkshire Hathaway’s vice
NZ
chair for non-insurance operations and was appointed to Berkshire’s board of directors in 2018.
Back in 2021, Buffett already flagged Abel as his preferred successor. Ajit Jain, who leads Berkshire’s insurance business, was also touted as a potential contender.
During the shareholder meeting, Abel said: “As I’ve said in the past, [I couldn’t] be more humbled and honoured obviously to be in this role but to have actually been part of Berkshire now 25-plus years.”
“And you find something like Berkshire that’s so special, you fall in love with it and it becomes just what you want to do every day and it’s just an incredible opportunity…”
Buffett added that he has “no intention – zero – of selling one share of Berkshire Hathaway” and that he “will give it away gradually.”
“The decision to keep every share is an economic decision because I think the prospects of Berkshire will be better under Greg’s management than mine,” he said.
Berkshire Hathaway has 11 directors, two of which are Buffett’s children, Howard and Susan Buffet.
Charlie Munger, who was also behind the success of Berkshire Hathaway, passed away in 2023. Munger joined Berkshire Hathaway in 1975, when Buffett was chair. Munger became vicechair in 1978.
Over the course of six decades, Buffett and Munger turned the company into a multinational conglomerate worth billions of dollars, with numerous business units. fs
Super recognised
for two decades of outperformance
Jamie Williamson
The New Zealand Superannuation Fund is the world’s best-performing sovereign wealth fund over the past 20 years.
That’s according to GlobalSWF’s annual rankings, which found NZ Super Fund’s returns over the 20 years to June 2024 significantly outperformed its peers.
Over the period, the average sovereign wealth fund returned 6.4% and the average pension fund return was 6.8%, but NZ Super Fund achieved an average annualised return of 10.03%.
Over 10 years, it saw a 10.33% return – also ensuring it nabbed the title of top performer among sovereign wealth funds. AP7 took the top spot for pension funds with 13.11%.
“In part, that reflects how well global equities, which presently make up about 60% of the fund’s assets, have performed during that time,” NZ
Super Fund chief executive Jo Townsend said.
“In addition, our active investment strategies have also outperformed both our Reference Portfolio benchmark and our long-term performance expectations.”
Maintaining long-term, growth-oriented investment strategies through multiple market ups and downs had been central to the success of the NZ Super Fund, she added.
Meanwhile, over 10 years the Future Fund was the best performing Australian fund, achieving 8.29%. This beat Australian Retirement Trust (8.09%) and AustralianSuper (8.08%).
However, over 20 years Hostplus wins out with 7.88%, followed by AustralianSuper on 7.86%, Cbus at 7.64%, Australian Retirement Trust on 7.59% and Future Fund at 7.56%.
The rankings compare the returns of 13 sovereign wealth funds and 37 pension funds from 18 different countries. fs
Foreign investment booms
The Australian Bureau of Statistics (ABS) has released its yearly reading on Australia’s international investment position, showing a boom in foreign investment into the country. In 2024, foreign investment rose $326.9 billion to hit $4.97 trillion. However, Australian investment abroad also rose $492.4 billion to hit $4.31 trillion.
Foreign investors showed a preference towards investing in debt ($1.63 trillion), followed by direct investment ($1.28 trillion) and equities ($885 billion).
On the flipside, Australian investors looking abroad showed a preference for foreign equities ($1.54 trillion), followed by direct investment ($1.2 trillion) and “other” ($572 billion).
The United States was the main contributor of investment into Australia, contributing $1.35 trillion of investment. This was followed by the European Union with $869 billion of investments and the United Kingdom with $839 billion.
Other major investors into Australia were Japan, China, Canada and the ASEAN region. In terms of where Australian investors were putting their cash, the US topped the list with Aussie investors pumping $1.55 trillion into US investments, $106 billion of which were portfolio investment transactions, likely because of booming US stock markets in 2024. This was followed by the UK with $698 billion and the EU with $478 billion. fs
01: Jim Chalmers Treasurer
Global economic uncertainty the main priority: Chalmers
Eliza Bavin
The quote
We have to build more homes now, we’ve got to get this energy transformation right, we’ve got to do more to embrace technology...
Freshly re-elected Federal Treasurer
Jim Chalmers 01 said the “immediate focus” of the government is tackling global economic uncertainty because of US President Donald Trump’s tariffs.
Speaking with the ABC after the election win, Chalmers said he is particularly focused on how the trade war ramping up between the US and China will impact Australia.
“I think one of the reasons why we got this big majority [in the election] is because people recognise that if you wanted stability while the global economy was going crazy, then a majority Labor government was the best way to deliver that,” Chalmers said.
“Our agenda is really clear. We have to build more homes now, we’ve got to get this energy transformation right, we’ve got to do more to embrace technology, particularly the AI opportunity.
“There’s a huge agenda there for us and what our agenda boils down to is obviously weathering and withstanding this global economic uncertainty in the near term but also making sure that we make the Australian people the primary beneficiaries of all of this churn and change that we’re seeing in the world.”
Chalmers added that the direct impact from Trump’s tariffs is “manageable and relatively modest” but acknowledged that there is a “huge downside risk” in the global economy.
“I think what’s happening, particularly between the US and China does cast a dark shadow over the global economy, and we’re not uniquely impacted by that, but we’re really well placed, we are quite well prepared because of the progress that Australians made over the course of the last three years. So, we go into that with a sense of, we’re realistic about how this could play out in the world, but we are optimistic about Australia’s place in it,” Chalmers said. fs
Financial Standard economics and investment table
Australian equities CPD Questions 1–3
1. How much were households charged in bank fees from credit cards in 2023-24?
a) $1.6 billion
b) $1.4 billion
c) $390 million
d) $10.9 billion
2. What is the biggest sector of the ASX 200?
a) Resources
b) Energy
c) Financials
d) Healthcare
3. Bank fees charged to businesses saw what percentage increase in 2023-24?
a) 3.2%
b) 5%
c) 11%
d) 6.6%
International equities CPD Questions 4–6
4. As per the UK-India trade deal:
a) India will cut tariffs on 99% of UK exports and the UK will cut duties on 90% of Indian goods
b) India will impose more tariffs on UK
c) UK will impose more tariffs on India
5. What was the return for S&P500 in the 40 days since liberation day?
a) -4%
b) -1%
c) -2%
6. The US’s biggest market sector Information technology returned 3.5% in the 40 days since liberation day.
a) True
b) False
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ACROSS THE AISLE
Bennelong Funds Management is like a mainline into the jugular of Australia’s financial advice sector, with more than 6500 advisers channelling capital to its funds. But its global chief executive John Burke says the job’s not done yet. Andrew McKean writes.
John Burke’s DNA runs back to Dublin, Ireland. His old man plied his trade in the sales and advertising game for wines and spirits – originally Irish whisky, of which there are almost as many barrels ageing on the island today as there are living souls to drink them.
Burke’s father’s work took the family to the US for a few years when he was a young child and then to Perth, Scotland.
He stayed through secondary school before rocking up to the University of St Andrews for a master’s in history and economics.
“That was a really fabulous place to go. There’s no one living at home, it’s always been a campus university – everyone came from afar, there are a lot of foreign students… it’s a great place to meet people and make friends because you’re on your own,” he says.
Bubbling social atmosphere aside, Burke speaks fondly of the classroom. History and economics had long held his interest, each discipline sharpening the other.
He says you can’t really understand major historical events without also grasping the economic forces behind them, noting that most revolutions are blown open by poverty, unmet expectations, or regimes burdening their populations with punitive taxes.
Toward the end of his studies, Burke found himself drawn to finance over history. The latter, he felt, demanded too much reading and time, something that would dull the shine of his university experience. Meantime, the UK economy, in the depths of recession at this stage, was being pulled out of the doldrums by the financial services sector in London. Graduate programs in consultancies, banks, fund managers, and law firms were snapping up the lion’s share of graduates, including Burke. Burke got picked up by a company that would later become Accenture, moving to London in 1996.
He later joined Mercer Investment Consulting, which he says was a fantastic way to “window shop” the funds management industry from all angles, meeting equity, bond, and hedge fund managers of all stripes.
When he joined Mercer, its UK investment consulting arm was still in its infancy, with about 30 staff and a leadership team drawn mostly from actuarial backgrounds rather than “investment people,” he says.
The region’s investment consultancy sector, however, experienced explosive growth following a regulatory push triggered by the collapse of Robert Maxwell’s media empire.
Burke says the regulator responded by mandating professional investment consultants be included in every trustee group.
“That’s when the upskilling of pension funds across the UK became very prominent, and
that led to the growth of businesses like WTW, Mercer, Hymans Robinson...” he says.
Looking to move from consulting into equities, particularly global equities, and spurred by a relationship with an Australian girl – now his wife – who wanted to head home, Burke joined AllianceBernstein as an investment specialist.
Burke spent four years at the firm, cutting his teeth on its domestic funds and products, before his remit grew to include Asia. At one point, he was living out of his suitcase, meeting clients in Korea, Manila, Taiwan, Macau, Hong Kong, Singapore, Malaysia, and Thailand.
He says it was “a massive learning curve” after years spent observing the workings of the funds management industry from the outside.
The constant travel schedule starting to wear thin, and with a baby on the way, Burke jokes: “I destressed my life by moving to a friendly German investment bank, Deutsche Bank.”
He spent four years at Deutsche Bank as a director in the structured solutions team, offering products to super funds including equity and fixed income protection strategies, asset-liability modelling, FX hedging, fixed return, and smart beta investing.
“When I was there, a colleague [Josh Heller] and I realised there was a gap in the market,” he says.
“The funds were getting much bigger and bringing in more skilled in-house people, but they weren’t using a lot of derivatives – and if they were, they may have had access to only a limited number of banks to trade with. So, we left Deutsche Bank on the same day to set up a standalone business within Challenger: Challenger Investment Solutions.
“Its sole purpose was to do derivative overlays and trades for super funds,” he explains.
Burke says he never imagined managing large sums of money, but he and Heller were trading billions each year in swaps, options, and other derivatives for about 10 super funds.
After five years, Burke was itching to “switch on another part of the brain,” moving away from trading and investing in favour of focusing more on management. The opportunity arose to become global head of Fidante.
He says the business went through “a huge amount of change in a short period of time,” with funds under management growing from about $62 billion to $82 billion in two years.
Burke joined multi-boutique asset manager Bennelong in May 2023, attracted by its privately owned structure, roster of managers, and scope to expand the platform.
He also says Bennelong is “taking active risk where you need to take active risk,” pointing to its mid-cap and ex-20 strategies managed by Bennelong Australian Equity
[Bennelong is] taking active risk where you need to take active risk.
John Burke
Partners and its Emerging Companies Fund, and more recently, Canopy Investors.
With it being “hard going” with super funds – “who are great clients,” but whose wants have “moved on massively” – he says future growth will come from the wholesale space.
“That’s where Bennelong’s strength has always been,” he says.
Burke says Bennelong has launched some compelling offerings for clients, including an insurance-linked securities fund that invests in catastrophe bonds, introduced last year in partnership with Leadenhall Capital Partners.
“No one’s seen their insurance [premiums] drop recently – whether it’s home, car, or anything else. That fund taps into those premiums, which I think is interesting as well, because if you look at Berkshire Hathaway’s results, for example, they’re making a lot of their money out of insurance and reinsurance in non-typical areas,” he says.
Looking ahead, however, he sees growing demand among wholesale clients for diversification and solutions that provide “a fairly steady level of income as they mature.”
Bennelong partnered with Allspring Global Investments to launch a global income fund this month, and Burke also flags offshore private credit and semi-liquid private market structures as areas Bennelong is actively exploring.
“We’re very keen to make sure we bring in high-quality products that address that,” he says. fs