As a general rule, we don’t recommend that investors use funds that won’t tell you what they hold. And we much prefer funds that invest in assets that reputable third-party organisations can value to ones where we rely entirely on the fund manager’s internal valuation of their investments.
This often presents a problem when our clients ask us to compare a portfolio to a publicly available superannuation fund. The vast majority of the big super funds provide almost no information on what they’re actually invested in. Usually, the best you can get is an overall asset class exposure. Even this is problematic, as there’s no official standard for asset class definitions and organisations will often put assets in different buckets.
Morningstar released a paper today stating that the fund disclosure requirements in Australia are the worst in the world, particularly for unlisted assets, which are the most likely to be hiding risks for investors. See below for an excerpt:
Despite the hype around private assets, we’ll continue to focus on investments where we can verify that investors are getting the exposures they expect and they are valued appropriately.
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Please note that past performance is not a reliable indicator of future performance.
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