OPINION: The legal requirement for daily pricing of units in superannuation funds does not make sense in a sector with an increasing exposure to unlisted assets valued at quarterly or yearly intervals.
On one side of the debate is Sam Sicilia, chief investment officer of Hostplus, who says fluctuating unlisted asset values are not a concern because the rises balance the falls.
Also, it should be pointed out this is not an issue that directly affects the Future Fund, which is a sovereign wealth fund, not an open offer super fund. It has a multi-decade liability horizon and does not offer instant liquidity to its ultimate beneficiaries – Australia’s federal public servants and politicians.
That is in stark contrast to Australia’s big super funds, which publish June 30 performance numbers in July, well before audited valuations are available.Arndt explains why it takes so long to get accurate valuations. “And so while you won’t be totally accurate, you will certainly be directionally accurate. Given the listed markets fell so significantly in the June quarter – the SP 500 fell 15.9 per cent and the ASX200 fell 12.7 per cent – it was quite obvious that assets would be written down over that quarter.”A super fund member who withdraws their money from a fund between valuation updates, which involved large falls in values, in effect are borrowing money from those remaining in the fund.
Both the Australian Securities and Investments Commission and the US Securities and Exchange Commission have strict rules about matching asset values with daily liquidity in managed funds.
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