Alternative assets may be stifled by a choice superannuation system that has grown used to short-term performance disclosure, panelists said at the Financial Services Institute of Australasia's conference 2012.
Jeremy Cooper, chair of retirement income at Challenger, said investing in alternatives for the long-term was a good idea which had been thwarted by the decision to put the super system on 30-day terms in 2005.
Most alternatives had liquidity and valuation issues which were difficult to explain to members who were being encouraged to manage their own retirement, according to Cooper.
"Those things don't work too well terribly together because how do you value these alternative assets?" he said.
Communicating the nuances of hedge funds was not a persuasive factor in legalsuper's decision to drop its allocations to the asset but it had been a relevant argument, Andrew Proebstl, chief executive at legalsuper said.
"One of the considerations is, can we adequately, sufficiently explain to our members what it means when we've invested in a hedge fund – will they feel better once we've given them that explanation or will they feel worse?" he said.
VicSuper chief executive Oscar Fabian said listed and unlisted assets faced the same issue: how could the fund explain to members that both sectors invested in the same underlying assets?
QIC Capital Markets managing director Troy Rieck said superannuation funds were giving members data but not the right information.
He said a fund's performance did not explain how well-funded a member's retirement program was or if they would be worse or better off.
"It doesn't really tell you anything, so one of the key challenges for superannuation funds is you can tell them all the data in the world, but it's not really information," he said.
