The changing behaviour of superannuation members is a vital factor for a fund to consider when developing effective liquidity management processes, according to AustralianSuper.
"Over the last year, one of the critical things that has been absolutely sheeted home to us is member behaviour," AustralianSuper senior investment manager Peter Curtis told Terrapin's annual asset allocation conference this week.
"We offer them all these choices and we know they actually start to exercise choice probably at the wrong hands of the cycle, but that's their decision, but we need to understand that choice can be exercised and that choice does cause impacts across the portfolio.
"We now have a much better understanding of what is realisable within the portfolio quickly and what we should just consider to be illiquid, whereas previously we assumed that asset class or parts of that asset class would provide us with some flexibility."
Curtis said in 2008 around 17 per cent of AustralianSuper's total inflows were switched by members, while in 2009 that figure had increased to around 45 per cent.
"The speed and size of the member switching was quite large and had multiple implications for us within the portfolio as the members decided to move basically out of our more pre-mixed options and into a capital guarantee, cash and fixed interest options," he said.
"Member contributions are something that has a critical impact on the portfolio. So what we're now asking our administrator is what are the attributes of those members to the extent of what's their age, what sort of industries are they working in, what is their level of contribution, which of the members are inactive. We're asking for all that sort of information so we can get a much richer picture of the membership base."
