Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
Regulator warns underperforming funds on member comms
The Your Future Your Super (YFYS) regulations have been both derided and welcomed by the industry. Bringing oversight to a multi-trillion dollar sector was important, but the regulations are far from perfect, with many suggesting they effectively direct industry funds toward an indexed approach, or alternatively, don’t appreciate the nuances of investing for the very long-term.
Either way, they appear to be having the effect desired by the previous government, which was a consolidation of the industry, and weeding-out of the underperforming funds. Progress is clearly being made, however, ASIC this week reported findings of its review of communications to members from said “underperforming funds.”
13 of Australia’s APRA-regulated super funds failed the test in 2021, which included the likes of BT’s Retirement Wrap, the AvSuper Growth Fund and the Energy Industries Super Scheme, among others; many of which have either closed, merged or intend to merge in the coming months. The regulator was not particularly impressed with the way underperforming funds had communicated their results with members.
While the review found that most trustees “complied with legal obligations to notify members of their failed test,” unfortunately the “communication strategies of some trustees may have risked confusing or misleading members about their product’s performance.” The regulator highlighted three key concerns in REP 729, being:
- publishing the MySuper product’s failure of the test on a webpage less likely to be visited by persons interested in the product;
- highlighting other performance measures that were more favourable, such as recent positive past-performance figures; or
- criticising aspects of the test to suggest it was not relevant to the particular product.
Responding to the review, ASIC Commissioner Danielle Press said, “The performance test supports transparency of product performance for members so they can make more informed investment decisions. Trustees should act in their members’ best financial interests by being transparent about the performance of their product. They should communicate their performance-test results to members in a balanced, clear and factual way.
‘Communication strategies that don’t prominently disclose the test result or obscure the importance of a failed result in some way are not acceptable,” Press said.
