Superannuation funds can still seek opportunities in the current market turmoil without having to change their long-term investment strategy, according to an investment report from Watson Wyatt.
Watson Wyatt provides advice to 63 of Australia's institutional clients including the $60 billion Future Fund.
The consultant notes institutional investors are now "prepared to move away from their historical practice of making investment decisions around dates in the diary and opting instead for investment processes that can implemented when opportunities arise".
In particular, the credit market is the most interesting sector despite the meltdown in the US sub-prime market.
Opportunities can be found by investing in quality companies at cheaper prices or in distressed debt.
By looking at such short-term economic uncertainties, investors can use market indicators as "triggers to switch from one asset class into credit-based strategies", it said.
It was important, however, that such investment decisions matched the governance arrangements of the fund.
Watson Wyatt expects more institutional clients will adopt more dynamic, but still long-term strategies.
