Christian Super’s chief investment officer has expressed a desire for his fund to follow QSuper in taking responsibility for individual members’ sequencing risks.
Until now, few chief investment officers have publicly shown any support for the path taken by QSuper, which has placed members over 58 years old with balances of more than $300,000 into a fund with less volatility than other members and plans to segment more.
Tim Macready, chief investment officer for Christian Super, is interested in exploring what measures his fund can take to ensure members achieve a more even outcome of returns.
“As a CIO, I should be measured not only on the performance of each fund option, but the extent to which members are realising that benefit by being in the appropriate option,” he said.
He expressed admiration for the path taken by QSuper.
“What we are doing is not quite as far as QSuper is going with its mass customisation model – you need a degree of scale to do that – but we hope we can watch them and learn. And, if they do the ground-breaking work and show that it can be done, then it might be possible for the funds with less scale to achieve that sort of outcome.”
Around 8 per cent of Christian Super members, including many 20 to 30-year-olds, are in a cash option that achieved 4.4 per cent in the last financial year, while the default option with 70 per cent in equities achieved 16.8 per cent.
“Four-point-four per cent is failure for a member who really should be getting a lot more,” says Macready, who believes that some members chose the cash option because they could not stomach the volatility, but that others were misinformed.
He has seen members switch to low-risk options over equity market dips as short as three months.
The fund is looking at introducing a lifecycle fund as part of a solution to ensure more even outcomes among members. It came close to offering lifecycle as its MySuper default, but decided to defer due to the administrative complexity it would have created.
Macready said: “Essentially, we are looking for a model with which we can engage members as much as possible and in which the lifecycle default becomes a back-up for members whom we cannot engage. The trick is to get members into the products that are suited to their needs.”
One of the concerns for a fund taking such a guided approach is that it needs members to stay the course.
“The worst thing you can do is have them on this journey and then abandon ship half way through,” he explained. “The indications are that we have a highly engaged membership and a high percentage of members actively engaged with the fund. If we under-perform, they tend to stick with us longer because of the values alignment.”