More scrutiny better for members: AustralianSuper’s Delaney

Chief investment officer Mark Delaney says greater scrutiny of the $4 trillion super sector is in everyone’s interest.

Allison Hill, CIO of QIC, Russell Clarke, CIO of VFMC and Mark Delaney, CIO of AustralianSuper appear on a panel with Hostplus CIO Sam Sicilia at the APFIS conference. Picture: Supplied

AustralianSuper chief investment officer Mark Delaney says greater scrutiny of the $4 trillion superannuation sector is in everyone’s interest and guidance from regulators simply reflects good practice by trustees.

The regulatory framework and oversight of Australia’s super funds by the Australian Prudential Regulation Authority and the Australian Securities & Investments Commission do not hinder investment opportunities and returns, Mr Delaney said at the Asia Pacific Financial and Innovation Symposium in Melbourne on Tuesday.

“They’re not mutually exclusive, they’re actually very compatible. The regulators do a pretty good job … and their guidance really just reflects good practice, whether it’s in valuations, good governance, organisational strength and transparency. They’re all the things a good trustee (should do).”

AustralianSuper, the nation’s largest super fund with $360bn in assets, has been in the regulator’s firing line following a series of member failures including lengthy delays in paying out death benefit claims.

ASIC this month sued the fund over its botched death claims handling since 2019, with AustralianSuper putting the blame on a spike in deaths early in the Covid-19 pandemic.

“If APRA’s challenging the industry to be better, that must be in everybody’s best interest. And being better must mean you make more money for members, and you’re making it more secure,” Mr Delaney said.

Turning to the volatility that has ripped through markets in recent weeks, Mr Delaney said the fund had made no changes to its investment portfolio.

“There’s been a lot of volatility … but that volatility has been within the context of a pretty solid underlying economic backdrop so the ability to absorb it is quite substantial. Looking forward you wouldn’t expect the volatility to go away but maybe ease somewhat,” Mr Delaney said.

“The other thing is, the massive out-earning of (US) AI stocks has diminished over the past five months and the market is starting to consider how that future pans out.

“Of course in the tech environment there’s always volatility, this shouldn’t be unexpected either. Given all that, we’ve done nothing with our portfolio,” he said.

On private markets, Mr Delaney said super funds were restricted to an extent in how much they could put into this growing segment of the market.

“When you look at pension plans and wealth funds (around the globe), what you find is they have increased their allocation to private markets. Aussie super funds have had that strategy for a long time … Liquidity requirements (of super funds) naturally puts a limit on how much we can put in private markets.”

At the same conference, IFM chair Cath Bowtell said private pension capital was better at delivering infrastructure than public ownership because it could take “a genuinely long, 40, 50, 60-year investment time frame.”

“Governments around the world have infrastructure deficits. The infrastructure deficit across the US, the quality of the roads and bridges and the rest of it, is an enormous amount of money that could be supported by private capital.”

IFM, along with AustralianSuper, Aware and other major funds, in February went to the US for a four-day summit to promote the $4 trillion super sector investment in the US.

Originally published as More scrutiny better for members: AustralianSuper’s Delaney