Australian super funds start to reveal portfolio holdings

Australians are no longer in the complete dark on what their hard-earned cash is being invested in, with super funds now required to disclose their investments.

Super funds are now required to disclose their holdings, with an update on investments every six months.

Australians are no longer in the complete dark on what their hard-earned cash is being invested in, with the nation’s super funds from this week required to publicly disclose their investments.

But with many funds employing external managers to handle at least a portion of their investments, workers will have to wait a while longer before getting the full picture.

As announced by the Federal Government in November, superannuation funds must, from March 31, disclose information about the identity, value and weightings of their investments.

“This information will make it easier for members to compare products and identify the most suitable fund for them,” Superannuation Minister Jane Hume said at the time.

The new disclosures, listed on each super fund’s website, for the first time give workers an idea of where their money is going.

Members of the nation’s largest super fund, the $260bn AustralianSuper, for instance, can now see that the fund has holdings in 170-odd listed Australian companies and more than 2500 listed international businesses.

Members can also view the fund’s property holdings and the value ascribed to each, within reason. (Some of the fund’s office holdings around the country have a valuation somewhere between $10m and $50m.)

Like others, the nation’s second largest super fund, Australian Retirement Trust, created through the recent merger of Sunsuper and QSuper, names the external managers of its unlisted investments in its latest disclosures, but provides no further information on the underlying investments.

Speaking to The Australian, Bernard Reilly, the CEO of the $230bn Australian Retirement Trust, acknowledged there was more work to do to make portfolio holdings fully transparent but said the disclosures would still be “really useful” for members.

“Giving members another window into their investments is really important and so we hope it means that members will be more engaged with their super; that’s the advantage of it,” Mr Reilly said.

“This is the first pass and we would like to drive to more transparency. But some of that, especially when using external managers, it’s not as straightforward as when you manage funds yourself and have control over the information in real time.”

The fund will work to improve the disclosures of external managers in time, he added, saying part of the issue was system limitations.

The latest requirements on the $3 trillion super industry come as the prudential regulator warns on the sustainability challenges facing small and medium funds.

The Australian Prudential Regulation Authority this week said smaller superannuation funds are more likely to struggle to deliver quality, value-for-money member outcomes into the future. Putting a line under $50bn in assets under management to mark out the larger funds from their smaller peers, APRA member Margaret Cole said size matters when it comes to boosting financial outcomes.

Mr Reilly tipped that in the next five to 10 years, consolidation in the industry would see 8-10 mega funds emerge, alongside niche offerings

“There may be some small funds that will still exist, for a specific reason. Either they’re a corporate that wants to stay in that space to offer a particular advantage to their members/ employees, or it could be a specific industry or industry body that wants to maintain a presence. But they will be in the minority relative to other funds that are making the decision to merge today.”

Mr Reilly predicted a rise in corporate funds merging with bigger players in the future, “unless they have a strong value proposition”.

“We’ve got a strong pipeline of corporate plans moving to Australian Retirement Trust, or looking to do that,” he said.

Earlier this month, the Australia Post Superannuation Scheme (APSS) agreed to merge with Australian Retirement Trust.