What to watch in 2012

Mergers: Actuaries Rice Warner says the number of Australian Prudential Regulation Authority regulated corporate funds will fall to 35 by June 2016 compared with 143 as of June 30, 2011. During the same time period the number of public sector funds will slide to 25 from 37 and the number of industry funds will drop to 42 from 65.

AustralianSuper, the $42 billion fund, told I&T News it wants to merge with public sector funds. “Consolidation and reduction in funds is the future,” says Paul Schroder, general manager, growth and new opportunities at AustralianSuper.

Bill Shorten: The Minister for Financial Services and Superannuation and Employment and Workplace Relations’ profile is rising. He is seen as an increasing powerful ally of Prime Minister Julia Gillard whose promotion to cabinet last month is perceived as reward for his loyalty and assertive defence of her government.

Shorten wants to make Australia “a hub for international investment” in the “Australia-Pacific century.” His bigger challenge is to make Australia a financial hub.

Costs: After the Australian Financial Review reported that a Superpartners’ information technology platform is costing five superannuation funds $130 million or three times its original cost after a three year delay, you can bet that trustees are going to be under increasing scrutiny on expenses by their members and the regulator.

Hedge Funds: In 2011 hedge funds had a very bad year. A very, very bad year. Eurekahedge, an independent information firm that specialises in hedge fund data, says its index for hedge funds dropped 4.1 per cent last year. John Paulson apologised to his investors in November. But investors still continue to pour into hedge funds, lured by past tale of outlandish returns. Eurekahedge says US$67 billion flowed into hedge funds in 2011 bringing the total industry size to US$1.72 trillion. Will fund flow continue into hedge funds after a dismal 2011?

Future Fund: Chairman David Murray steps down in April amid speculation as to who will replace him at the $73.2 billion fund. Stephen Fitzgerald, the chairman of Goldman Sachs Group Inc.’s Australian and New Zealand units, and a Future Fund board member may become its chair, the Australian Financial Review reported December 22. Goldman Sachs influence in boardrooms across the world have helped it become Wall Street’s premier investment bank. But will potential conflicts of interest plague Fitzgerald if he becomes the fund’s chairman?

Asia: Perpetual Ltd. and Ascalon Capital Management are expanding into Asia to try and tap into the region’s status as home to the world’s most dynamic economies. Will other Australian asset management firms leave their safe home shores for more adventurous climes that have the potential to make them significantly bigger? If Australian asset managers do not make a commitment to invest in Asia what does it say about Australia’s engagement with the region?

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