Whitehelm has developed a suite of liquidity management tools designed to help superannuation fund executives and trustee boards better understand and manage liquidity issues impacting their fund.
Liquidity management in superannuation has become a critical aspect of the investment approach. Rapidly changing market conditions can place funds under liquidity pressure – this can be exacerbated for some funds due to their underlying member demographic profile.
Our service offerings include comprehensive member profiling, providing key insights into potential risk areas, detailed modelling of exogenous shocks (for example, the current legislative reforms) and development of scenario analysis at the overall fund level.
While demographic profiling provides a fundamental input into long-term liquidity management, the analysis can also deliver valuable insights for targeted marketing campaigns and benchmarking to industry averages.
Liquidity Stress Testing
Liquidity management is a critical factor for superannuation trustees and fund operations, and the Australian Prudential Regulation Authority (APRA) has identified this as an area in which trustees need to strengthen their practices.
Our detailed liquidity modelling includes stress testing of potential economy wide shocks, in conjunction with relevant tailored fund specific scenario analyses such as the departure of a certain cohort of members by age, balance or consolidation out of the fund by inactive members.
The forward-looking analysis assists fund managers in understanding the nature of their underlying investments and their impact on a fund during potential market stresses.
Liquidity Policy Development and Liquidity Impacts due to Regulatory Changes
Given our extensive experience as advisers for major Australian superannuation funds, Whitehelm is well placed to provide keen insights into liquidity policy development.
Furthermore, Whitehelm can assist funds to keep abreast of all regulatory changes in the Australian superannuation environment and work with funds in understanding how to help to minimise the potential liquidity impacts these changes can have.