Portfolio disclosure adds nothing for fund members
Disclosing portfolio holdings within superannuation funds will make little difference to fund members who lack control over super fund investment decisions and are unable to act on the information according to a leading legal firm.
King & Wood Mallesons, in a report titled "Reporting Red Tape" which examines the upcoming legal requirements for superannuation funds to disclose portfolio holdings, stated the Federal Government had not shown there were sufficient regulatory or consumer benefits to justify superannuation funds reporting their portfolio holdings. It also stated the disclosure requirements had not made provision for super funds being unable to fully report holdings in private investments.
The report noted that while the explanatory memorandum to the relevant amendment to the Corporations Act to create the disclosure regime stated "portfolio disclosure in Australia is unduly opaque" and did not meet global best practice it did not identify any "specific outcome of the changes nor any real benefit to members" who can do little with the information
"This raises a question as to why the Government should impose new and additional regulatory burdens, the costs of which will ultimately be borne by the members who have not demanded the data," the report stated.
"Why impose a burden where the benefits have not been enumerated? Plus, as with all regulatory requirements that result in a practical and administrative burden, investment reporting by superannuation funds comes at a cost. A cost that will ultimately be borne by the members of the superannuation funds."
The report also stated the disclosure requirements, due to start in July 2015, do not take into consideration offshore and private investments where information may not be available due to the underlying nature of the investment or because of confidentiality agreements.
It argued that forcing these investments to provide information may shrink the investment universe available to super funds and funds should only be forced to be disclose information on private investment where it would not act against the best interests of fund members.
AUTHOR
Jason Spits
Jason has been writing on financial services since 1999 and has worked for on a number of trade media titles in both a full time and freelance capacity. He joined Money Management and Super Review in 2013 in the role of Senior Journalist.
Recommended for you
Australia’s largest super funds have deepened private markets exposure, scaled internal investment capability, and balanced liquidity as competition and consolidation intensify.
The ATO has revealed nearly $19 billion in lost and unclaimed super, urging over 7 million Australians to reclaim their savings.
The industry super fund has launched a new digital experience designed to make retirement preparation simpler and more personalised for its members.
A hold in the cash rate during the upcoming November monetary policy meeting appears to now be a certainty off the back of skyrocketing inflation during the September quarter.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
225.31 3 y p.a(%)
2
Loftus Peak Global Disruption Fund Hedged
120.73 3 y p.a(%)
3
Global X 21Shares Bitcoin ETF
72.47 3 y p.a(%)
4
Paradice Australian Mid Cap A
69.09 3 y p.a(%)
5
Global X Ultra Long Nasdaq 100 Complex ETF
61.94 3 y p.a(%)
