Industry Super Funds, Why Not….

On occasion I am asked by my clients to review their industry super funds.

I am lucky. Our licensee has a provision in their licence to allow us to advise on super funds including industry super funds. So I set to work looking at the investment products available on industry super funds. I use the word product because they are packaged investments, off the shelf if you like.

The first thing I notice is how little information I can obtain about them. I trawl through the corresponding website, download the PDS and dig for information. I can usually obtain unit prices and performance figures. This has certainly improved in recent years but when I drill down I am never certain what my clients are buying when they go this way. If I am looking to build in specific protection for my clients I am not sure how to do it with the “ products” that are available to me in an industry super fund.

I know that I will not be getting invited along to any investment seminars. I know that I will not be able to sit with the investment manager and ask why they did this or that, what the holdings are and where the risks are in the portfolio. I do not know if some of the investments in the industry super funds are in an internal project that are unlisted or illiquid.

What if I am looking to use one of the managed future hedge funds that I have been using for as long as 18 years, or an investment fund that sends me a report every month and sends a representative every quarter for me to discuss the fund with? What if my client wants to own a specific share, is it available?

It’s transparency,  that is the issue.

The costs quoted sometimes do not make sense, especially when I do recognize a number of the underlying fund managers and I know through past experiences how they charge. The numbers do not add up. So I defer back to what I know. In the same way that when the plethora of new product floggers come knocking on my door with the next big thing I defer back to what I know. Tried and trusted and probably a little boring.  These days we do our best with the information available to us but this lack of transparency compared to the investment vehicles we use is still an issue.