ASFA proposes asset classification standards
Tuesday, 16 September 2008 10:30am
A background paper on how super funds should classify assets in their diversified investment options, prepared by the Association of the Super Funds of Australia (ASFA), has recommended funds and research groups standardise how they classify assets and consider phasing out the terms balanced and growth when labelling their options.
ASFA developed the paper because "there is a wide disparity of views in regard to whether certain asset classes should be classified as growth or as defensive".
ASFA said there were strong arguments that assets where the super fund has an equity interest, eg they purchase a direct holding in an infrastructure project, be classified as growth investments.
The compromise proposed by ASFA is however that funds can split the categorisations of unlisted core property, unlisted infrastructure, timber and some hedge funds as half growth and half defensive in their asset weightings.
"The main compromises have been made in those asset classes for which valuations occur relatively infrequently and/or where valuations, if sought on a more frequent basis, may be subject to some challenge," noted the paper.
ASFA however said funds could use their own categorisation splitting if this 50:50 approach wasn't properly reflective of their portfolio structure.
Ambiguity around these issues, according to ASFA, is why "there are a number of superannuation funds that have ceased to use the words growth and defensive in the Product Disclosure Statements. Rather, the funds just name asset classes that comprise the diversified asset class options."
The paper did not nominate the growth asset ranges that should constitute portfolios categorised as "growth" or "balanced".
The full paper can be downloaded from ASFA's website.
Alex Dunnin
This story was found at: http://www.financialstandard.com.au/news/view/24023
Printed: Friday, 12 March 2010 12:34pm