Our Head of Equities, James Gunn, recently joined investment leaders from across Australia’s superannuation and funds management industry for an Australian Financial Review roundtable examining the forces reshaping the Australian equity market. The discussion covered the growing influence of passive and systematic investing, changing market dynamics and the implications for fundamental price discovery and active managers. Drawing on Frontier’s research and observations of the Australian market, James highlighted the significant challenges active managers have faced in recent years. He noted the shift from active to passive investing has been driven by a combination of factors, including the growth of larger asset owners and increased scrutiny on investment outcomes. The conversation explored how these changes are influencing market behaviour and portfolio construction. James observed active managers are increasingly considering a broader range of factors when executing their investment process including trading dynamics, register composition, factor exposure, crowding and other market influences. At the same time, he emphasised the importance of ensuring portfolios are designed to effectively express a manager’s investment edge in a more demanding environment. A broader theme throughout the discussion was how active managers are adapting to an evolving market landscape. While participants acknowledged the challenges created by increased indexation in an already highly concentrated market, they also highlighted the industry’s ongoing efforts to refine investment processes, adopt new tools and evolve portfolio construction approaches. The roundtable provided a timely examination of the trends shaping Australian equities and the continued evolution of active management in response to changing market structures. The AFR had a series of articles following this session: AFR Forum: ASX kingmakers on big super, crazy sell-offs and IPOs > Super mega-funds tell rock-star stock pickers to lift their game > Why Australia’s top fundies have gone all Ted Lasso >
