Super funds revalue unlisted assets

Some of the nation's largest superannuation funds have revalued their unlisted assets to give members an up-to-date understanding of how COVID-19 is hitting their retirement savings.

AustralianSuper has cut the value of its unlisted assets to the tune of 7.5% on average, leading to a 2.2% reduction to the fund's $126 billion balanced option on Monday.

AustralianSuper chief executive Ian Silk said the "unique" circumstances facing the world had led the fund to revalue its unlisted assets, though he said assets in its portfolio were held at their "fair value".

He added regular independent valuations were undertaken to "maintain equity between members at all times".

"The values of all investment portfolios have been adjusted to reflect the economic and financial market impacts of COVID-19," Silk said.

"The Fund will continue to constantly monitor the outlook and ensure valuations remain fair."

But the nation's largest fund isn't alone. The $86 billion industry fund UniSuper has also been forced into a revision of its unlisted asset values, with the fund confirming its unlisted property values have taken a 10% hit, while its unlisted infrastructure has fallen by 6%.

In an investment market update released to members earlier this week, UniSuper chief investment officer John Pearce said the fund has a "conservative approach" to liquidity, and as such carried a "relatively low" exposure to unlisted assets in its diversified options, including a 7% allocation to unlisted assets in its balanced option.

"We think of property and infrastructure as 'growth' assets so they don't qualify for inclusion in our defensive allocation," Pearce said.

"When we conduct our stress testing, we assume a scenario where the worst three months of the GFC happens in a single day."

Pearce said the conservative liquidity approach had held it in "good stead" so far, noting that the fund has been able to withstand a $2 billion run on its defensive assets as members flee growth assets amid the market turmoil.

"We've been able to comfortably manage without selling shares at prices we believe are too cheap," Pearce said.

"Another way of looking at it—we're effectively using our cash to buy the shares that members are selling. The strength of our liquidity position is such that we plan to continue the strategy for the foreseeable future."

Read more: SuperUnlisted assetsSuperannuationUniSuperAustralianSuperInfrastructureJohn PearceIan SilkGFC
Link to something W4fuHW0B