Total Portfolio Approach for Superannuation Funds

This guide discusses the Total Portfolio Approach (TPA) in the context of superannuation funds, emphasizing its shift from traditional asset class allocations to a focus on risk factor exposures. TPA aims to provide outcome-based solutions that align with individual beneficiary preferences regarding risk, liquidity, and ESG concerns. The document outlines the complexities involved in implementing TPA, including the need for a central data repository to manage diverse portfolio exposures and the integration of factor-based data analytics. It also highlights the cultural changes required within organizations, such as fostering collaboration among investment teams and aligning incentives with a holistic portfolio view. Furthermore, the guide addresses the regulatory implications of TPA, particularly in light of the 2021 Your Future, Your Super Act in Australia, which mandates performance testing for superannuation funds. The document concludes by noting the increasing interest in TPA driven by market trends and the necessity for funds to adapt to evolving investment landscapes.