Networth News

Welcome to the Networth News update for Thursday the 25th of August.

Fund managers need performance criteria

There should be an industry standard for performance criteria in funds management, according to Lonsec's Australian Equity Long/Short Sector Review. Money Management reports that some fund managers set inappropriately low performance hurdles as well as high outperformance fees. Of the 14 managed funds reviewed in the report, typical performance fees were found to be up to 20 per cent of any returns greater than a fund manager's performance target. The review also found that some fund managers are unnecessarily ambiguous when it comes to setting performance hurdles.

DIY super investors pull back on shares

DIY super investors are increasingly pulling back from owning direct shares in their super portfolios, according to Dixon Advisory. The Financial Review reports that such investors are less interested in assurances they should hold existing share positions despite market upheavals. DIY super investors are relying on their experience of the global financial crisis when it comes to pulling back on share ownership and taking a more conservative approach. However, more aggressive investors who might have had up to 80 to 90 per cent exposure to shares pull 60 to 70 per cent.

More investors take up SMAs

There has been increased uptake in the number of investors availing themselves of separately managed accounts (SMAs), according to Standard & Poor's (S&P). Money Management reports that a major factor in the growth of the SMA sector, particularly when it comes to funds inflow, is a greater range of investment strategies and platform availability. S&P said investors have a preference for low turnover in stocks as well as shares they know and understand. It is also important to investors for investment managers to have a greater degree of conviction in their stock picks, according to S&P.

Treasury cautions on years of rocky markets

Global financial markets will be volatile for at least the next few years, according to Treasury secretary Martin Parkinson. News.com.au reports that there is significant concern over the lack of credible policy responses to recurrent episodes of market volatility. Parkinson said repeat episodes of the recent upheavals may be triggered by apparently innocuous events or pieces of information. As a result, he said the Australian economy is at risk of increased macroeconomic instability.