Wakefield Partners

Switching to a sustainable pension fund is one of the most effective ways to reduce a person’s carbon footprint, with no performance tradeoff required. As the need for climate solutions grows more urgent, the momentum for environmentally friendly investment options in Australia’s $3.5 trillion super sector is gathering pace.

With tighter monetary policy likely to keep returns on equities capped for the remainder of the year, advisers identify key themes that will provide growth and defence for a resilient portfolio.

As the economy tilts toward recession, portfolio analysts are turning towards sectors and companies that handle cloudy conditions better than most. Healthcare, energy, consumer staples and utilities come into focus, while cyclical sector companies lose favour.

While the move to tax superannuation balances above $3 million at a higher rate would affect only a handful of people at first, if the threshold is not indexed to inflation, future generations may be turned off from investing in their super, industry leaders say.

ETFs have “well and truly taken over from actively managed funds” in investor preference for growth investments, advisers say – but when it comes to cash, they recommend eschewing the increasingly popular ETFs in favour of direct investments.

Highly anticipated new consumer price data showed the inflation rate in Australia hit its highest level since 1990 in the December quarter. But analysts are mixed on whether inflation will moderate later this year or become more entrenched.

Vanguard Australia recently launched a superannuation product aimed at undercutting competitors, with a low-cost default fund option that adjusts automatically as savers age.