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Interesting insights were shared by speakers on current market conditions/volatility and its impact on private equity, private credit, and commercial property from a risk/reward perspective.
Discussions about operating model development (data quality, AI, technology platforms, data integrations) reinforced the need to ensure managers have the operating model capabilities in place to effectively manage the risks inherent in these asset classes in an efficient and effective manner.
Of note, and not surprisingly given the increased focus of regulators ASIC, APRA, and the RBA on private assets, were the conversations on governance, oversight, and risk management (in particular, liquidity risk and asset valuation). APRA's SPS530 standard on investment governance sets clear expectations on what is expected by APRA and the discussions on APRA's research findings and engagements with Trustees over the last 12 months or so were enlightening.
The observation was made that the industry has a fundamental mismatch between the allowable transaction profile for members in super schemes and the liquidity/valuation characteristics of private assets (the same applies in NZ of course as it relates to KiwiSaver). Ensuring members' interests are protected and that members are treated fairly, must be at the forefront of Trustee considerations.
So, a worthwhile day. There was plenty of “food for thought” and future dated risks for consideration in the context of our local market. Thanks to Fund Business for bringing the agenda together.
