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Thursday, 2 April 2020

Industry Super Funds likely to have their 'creative accounting' exposed

For quite a while there has been some concern/criticism raised by retail super funds about the way Industry super funds have often made large investments in illiquid 'infrastructure' investments that have then been categorised as 'conservative' simply on the basis of infrequent asset revaluations and low price volatility (simply because these monolithic investments are not traded in any 'market' but tend to be bought and sold in single, off-market transactions).

If a large number of Industry super fund members take advantage of the new rules around being able to withdraw some of their superannuation if suffering economic difficulty due to the Covid-19 crisis. then some Industry funds may find they do not have sufficient 'liquid' investments to deal with a 'run' on early withdrawals. We'll see how it turns out.

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