YFYS

Calling for a product modernisation framework to remove barriers that stop investors from moving to better investments, the peak body said current rules keep too many people stuck in dated, underperforming products, costing retirees and the government big money.

The changes to the Your Future Your Super performance test are an improvement, according to Willis Towers Watson. But the application of the test to trustee-directed products is probably more of a negative than a positive, and some benchmarks remain inflexible.

New data from bfinance and Invesco sees Australian investors and sovereign funds reducing exposure to growth assets in favour of private markets.

Overseas, Australia’s biggest super fund is a small fish in a massive pond. To achieve the scale it wants it will have to dive deeper into the private markets, meeting stiff competition from its North American peers along the way.

Funds have adapted to the test’s metrics, but the consequent risk aversion could put the industry in “limp mode” and curb performance.