Fund disclosures

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.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

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