The unlisted asset valuation challenge
Due to the practices of some other super funds, there has been an increasing focus on how often unlisted assets are being valued. This could lead to biased results because the owners of those assets could judge the value too generously.
How often unlisted assets are valued to determine what they are worth, often lags listed assets. This means if your super fund has invested in a significant amount of unlisted assets, it may be harder to know their true value and therefore, your real super balance.
Also, members have no information about whether their fund has revalued these unlisted assets, what the outcomes of any revaluation has been, and whether those valuations are consistent with other funds.
Unlisted asset valuation becomes an even bigger issue during tougher market conditions, which could see a dent in your super balance when your fund’s annual report is released. This is why it’s crucial to understand the scale of unlisted assets in your super fund.
While improvements to unlisted valuations won’t happen overnight, unlisted markets will start to value more appropriately and become more consistent.
CFS Chief Investment Officer, Jonathan Armitage, said that “unlisted assets absolutely have a place in investment portfolios, provided they can be independently valued at least quarterly so that members, and financial advisers, can make informed decisions about the investment options that underpin their retirement”.