Register  
ASIC calls for detailed disclosure on holdings of super funds
Tuesday, 20 March 2012 11:20am

ASIC Chair Greg Medcraft has called on all super funds to provide detailed breakdowns of asset allocation in member statements, saying simply reporting major holdings leaves room for cynicism.

The rise of the self-managed super fund (SMSF) does not correlate with the simplistic attitude that the Australian public is not engaged, said Medcraft, speaking at AIST's annual Conference of Major Superannuation Funds (CMSF).

The lack of transparency on exactly how funds are invested is potentially driving members away from the prudentially regulated superannuation sector and towards the SMSF model, Medcraft warned, saying disclosure of portfolio holdings and improving member statements will be in the best interests of all members.

"The compulsory nature of superannuation and its tax advantages arguably raises the threshold of what the community expects in terms of transparency and disclosure and superannuation funds have obligations to their investors to be accountable for their investments," Medcraft said.

"We consider that disclosure of the underlying portfolio holdings of super funds is a key part of this sector's transparency to investors.

Funds should already disclose significant information about the nature of their investments such as providing a strategic or a tactical asset allocation in their PDS, however investors may be unable to access details of specific investments within a range of specific investment options offered."

Enhanced disclosure of portfolio compositions will have an impact on an investor's decision to invest, remain invested or exit a product, Medcraft argued and publicly available information on portfolio holdings in industry, retail and corporate funds is often insufficient to provide an investor with sufficient detail to make a properly informed decision.

While Medcraft acknowledged the efforts of industry bodies such as ASFA and the Financial Services Council working together to progress the issue of underlying portfolio disclosure, he said lack of member engagement should not be used as an excuse by some funds for a lack of transparency.

"Clearly you have full disclosure of portfolio holdings in the United States and the United Kingdom so my view is at the end of the day it should be full portfolio disclosure," Medcraft said.

"I'm always reluctant when someone says we'll only disclose the major assets. It reminds me of the days when I ran securitisation around the world and we had a CDO business and we used to have a 10% bucket which was the minor assets - it's actually where often the riskiest assets were so I'm always cynical about only disclosing major holdings - you then have to determine what's major and what's not.

"I think it's better to come clean and disclose everything," Medcraft said.

Transparency on exact portfolio holdings was not covered in AIST's research on funds' voluntary compliance on guidelines for disclosure released at CMSF, although the organisation said they would be including it moving forward, including in research for 2012.

Blogs
Follow the industry experts.
Christopher Page
Christopher Page
Managing Director

Quality of advice is the real constant
David Murray's Financial System Inquiry (FSI) is due to report in a few days and rumours and speculation on what it will recommend ...read more
 
Benjamin Ong
Benjamin Ong
Chief Economist

Reflation, rotation and the taper
'Tis being my final type (drivel, to some gentle readers) for the year, we'll take a look back at the 2013 that was to seek the lessons ... read more
 
Alex Dunnin
Alex Dunnin
Director of Research & Editorial Services

It's all in the coffee mugs
The Future Fund was already Australia's most misunderstood fund even before it released its latest explanatory paper describing its ... read more
News Search   
VideoBrought to you by
Managed Accounts Forum 2014 Highlights
Around 150 delegates attended Financial Standard's inaugural Best Practice Forum in Managed Accounts held in Sydney in August. Financial Standard also launched a new magazine: FS Managed ... Watch video
Introduction to Series #07
What are the key challenges advisers face when building retirement portfolios for clients? Watch Joe Fernandes, Head of Global Investment Solutions at Colonial First State Global Asset Management. Watch video
Colonial First State Multi-Asset Real Return Fund
Find out more about the investment philosophy and objective of the Colonial First State Multi-Asset Real Return Fund. Senior Portfolio Manager, Kej Somaia explains. Watch video
Zurich Investments Global Growth Share Fund
The pool of investable funds in the retail sector is ever growing, and as investors become more sophisticated the appetite for global equities is only going to increase. In this video, Noble says with ... Watch video
The New Neutral
At this year's PIMCO Secular Forum, the company's global executives set themselves the challenge of taking a three to five year view and anticipate where the market would be against what investors would ... Watch video
Why Multi-Asset Solutions?
Joe Fernandes, Head of Global Investment Solutions at Colonial First State Global Asset Management talks about the advantages of objective-based investing in the multi-asset space. Watch video
Get it
Daily
FREE to your inbox, get the Financial Standard Daily Email.
Get the Free
iPad app
Download the Financial Standard iPad app for FREE
Industry
Events
NOV
23
DEC
02
FEAL - La Trobe Financial National Achievement Awards
17
Post Retirement Australia 2014 Conference
MAR
25
Digital Marketing for Banking & Financial Services 2015 Summit
NOV
24
LEADERSHIP SERIES 2014 - FSC: Leadership in Financial Services
25
Helen Conway: Business Lunch
News
Bites

$245 (inc GST) for 1 year
 
 
Copyright © 1992-2014 Rainmaker Group
All material on this site is subject to copyright. All rights reserved. No part of this material may be reproduced, translated, transmitted, framed or stored in a retrieval system for public or private use without the written permission of the publisher.
Link to something W1ewUBNl