Are industry funds ‘under-reporting’ their exposures?
Many superannuation funds with unlisted assets are effectively ‘under-reporting’ the extent of their growth asset exposures, according to NAB Wealth.
In what appears to be a direct reference to the practices of some industry funds, NAB Wealth has used its submission to the Productivity Commission (PC) inquiry into superannuation competition and effectiveness to question the practice of funds self-classifying assets into growth and defensive categories.
It said many funds classified their unlisted property and infrastructure assets as entirely or partially defensive while those funds with listed exposure to the same asset classes classified them entirely as growth assets.
“This results in inconsistent classification of growth exposures across funds,” it said. “As such many funds with unlisted assets are effectively ‘under-reporting’ the true extent of growth asset exposure in their portfolio, and as a consequence are being grouped in the same risk categories as lower growth funds,” the submission said.
The submission said this was occurring despite the fact that such funds had higher growth exposures as well as higher illiquidity risk.
“Due to the diverse range of products available and the differing services and insurance options available to fund members, this impacts on the ability to appropriately compare like-for-like superannuation products,” it said.
The submission said that Australian Securities and Investments Commission (ASIC) Class Order 14/1252 and RG97 had introduced significant changes to the manner in which fees and costs would need to be treated and disclosed but suggested it would take time to determine whether the changes succeeded in addressing concerns of under-disclosure of fees and costs in super and managed investment scheme products.
Recommended for you
With a large group of advisers expecting to exit before the 2026 education deadline, an industry expert shares how these practices can best prepare themselves for sale to compete in a “buyer’s market”.
Australia has marked a decade among the best countries for retirement, according to Natixis, but with high inflation threatening their retirement goals, a third say they would get professional advice to improve their chances.
When it comes to the risks of acting as a responsible manager at an AFSL, compliance firm Holley Nethercote has shared a range of red flags that could see them facing disciplinary action from the corporate regulator.
Wealth management platform provider Netwealth has announced a partnership with FinClear to streamline trading capabilities for advisers.
