Billion-Dollar Hit to AustralianSuper Raises Red Flags on Superannuation Valuations
Understanding the Impact of AustralianSuper's Write-Down
A billion-dollar hit to super fund giant AustralianSuper has brought to light concerns about the valuations and investment returns of super funds investing members’ money in unlisted assets. AustralianSuper confirmed a write-down of $1.1 billion relating to an investment in Pluralsight, due to declining profitability and worries over future growth.
Valuable Insights from Market Experts
- Mark Hargraves, head of international and private equity at AustralianSuper, cited deteriorating sales revenue and increased debt service costs as key factors for the sharp trading performance decline.
- Pluralsight is an online platform focusing on web-related skills, yet faced a challenging market environment.
Unlisted assets, including private equity and real estate, are often under scrutiny for their valuations, which critics argue could inflate historical returns.
The Role of Unlisted Assets in Super Funds
- According to Professor Lee Smales, these assets can provide potentially higher returns and access to growth-oriented startups.
- However, the lack of transparency and illiquidity are significant downsides compared to listed assets.
As of June 30, almost a quarter of members’ funds in the AustralianSuper balanced option were invested in unlisted assets, raising questions about the accuracy of unit prices.
Regulatory Concerns and Future Outlook
The Australian Prudential Regulation Authority (APRA) has identified valuation practices as an area needing improvement, signaling potential regulatory changes ahead. Financial planners express hesitation towards funds with considerable unlisted asset exposure due to valuation volatility.
Overall, the AustralianSuper valuation situation may prompt broader discussions on the integrity and management of superannuation funds, particularly regarding unlisted investments.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.