Superannuation consultancy Tria Investment Partners has detected rising net inflows in some APRA-regulated funds, off the back of an “unexpected” jump in voluntary contributions.
Reflecting on recent “anecdotal evidence” received from clients, Tria managing director Andrew Baker estimates that cash flows are “better than [these funds] expected”, with net inflows up by 20 per cent for industry funds, or a real increase of $3 billion.
“This is unusual in itself, but what’s particularly notable is that around half of the jump has come from member contributions,” Mr Baker wrote in a communication issued yesterday.
This “unexpected” development is unorthodox, Mr Baker argues, because it was not spurred by any “one-off tax changes” or other “special factors” that might incentivise members to transfer funds into superannuation.
Instead, the rise in member contributions should be viewed as a sign of growing confidence – given that “member contributions is effectively fund member sentiment in action” – with a number of key factors suggested by Mr Baker.
Members are likely to have responded positively to the government’s commitment to “not make any adverse changes to super”, as well as increasing realisations that account balances have been too low and a “trend-following reaction” to more favourable financial market conditions.
However, the consultant and commentator also suggested that – should the rise in member contributions simply be a case of trend-following – that this is “less good” for the superannuation sector.
“There are some important learnings here in member behaviour, but more research remains to be done on what else is driving these member behaviours, and the extent to which it can be guided away from just chasing recent return,” he said.
“Sentiment deteriorates quickly and dramatically, but does not quickly turn around.”