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Aussies left in the dark on what’s really inside their super


And under property, which buildings do I own? As I’m walking through the CBDs of our major cities – or, indeed, around the world – which buildings can I claim part-ownership of?

On infrastructure, do I own a toll road, perhaps, or an airport?

And what am I to make of that mysterious “Other” category? The same document less than helpfully explained these assets could also be called “opportunistic” investments: “investment prospects which may arise from market dislocation and which offer the opportunity for the Fund to enhance its excess return incrementally”.

Thoroughly unsatisfied, I contacted the Association of Superannuation Funds of Australia, which suggested I check my fund’s annual report. Which I did.

It’s more than a year old now, but it does have a section on “investment holdings” (not for my specific investment mix, mind you, but held on behalf of all members).

Turns out I do own some shopping centres; one in Doncaster, Victoria, one in Castle Hill in Sydney and the resplendent Canberra Centre which, as a native Canberran, I shall feel a renewed sense of pride in when I next visit.

I also own a bit of both Melbourne and Brisbane airports, a transport company headquartered in Mexico City, a toll road in Indiana and petroleum pipelines in the Midwest of America. Huh.

As for shares, it’s roughly what you might expect, with the top shares in Australia being BHP, CSL, CBA, ANZ and Rio Tinto. Overseas, the top five are Apple, Microsoft, Amazon, Alphabet (owner of Google) and Tencent. I do, however, seem to have a rather large weighting into India via an ETF. Again: huh.

Alex Dunnin, executive director of research at Rainmaker Group, says only about a third of super funds disclose their underlying portfolio holdings, down to specific shares, properties, bonds etc.

“Regarding which funds declare the holdings, most of the big industry funds do: AustSuper, Aware Super, CBUS, Hostplus, Sunsuper, UniSuper, Care Super, HESTA etc. But not all do it the same way to the same level of detail.”

“For a few years, there’s been legislation on the books to make it compulsory for super funds to tell their members what they invest in, but ASIC keeps delaying the date when this is meant to start.”

This inaction leaves Australia with the absolute worst disclosure regime of 26 countries surveyed by Morningstar in its annual Global Investor Experience Study. Like, we’re literally rated “bottom”. South Africa, India and Mexico do better than us.

Says the report: “For a country that aspires to be considered a global financial centre, having weak regulation that endorses substandard portfolio disclosures should be a concern for all industry participants and is not in the best interests of retail investors.” Ouch.

Morningstar senior analyst Matt Wilkinson says this lack of transparency of underlying portfolio holdings makes it harder for fund members to make sense of the government’s new super comparison tool.

“Did a fund outperform because they are skilled at choosing the best securities, or were they just more heavily weighted into growth assets and those asset classes that have done best over recent periods?”

“Property and infrastructure can make up a sizeable proportion of default MySuper product holdings and, unlike listed assets, they are valued periodically which means they can have a significant influence on relative returns. Without transparency of holdings, we just don’t know.”

On shares, Dunnin says many funds are failing to even match the returns of the benchmark index.

For me, I’m looking at my super with new eyes. I want to know what’s in the box.

I’m glad that a few decades ago I decided to change my investment option from “balanced” to “growth”.

With decades still to run to my retirement, I wonder if I should be even more aggressively positioned in “high growth”.

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I’m also attracted to the idea of using either a self-managed super fund or the direct investment option of a large super fund to just stash 50 per cent of my nest-egg into a low-cost Aussie shares ETF and 50 per cent into a low-cost international shares ETF.

I have to compare the annual and other fees, but I could be paying an average management fee on my ETFs of about 0.13 per cent. And I’d know exactly where my money is.

I’ll let you know what I decide.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

You can follow more of Jess’ money adventures on Instagram @moneywithjess and sign up to receive her weekly email newsletter via The Age here or The Sydney Morning Herald here.

Source: | This article originally belongs to smh.com.au





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