21.7% vs 4.5% – the industry fund unlisted asset edge

Mike Taylor

Managing Editor and Publisher

29 May 2023

Unlisted assets continue to be the key performance differentiator between industry and retail funds, according to an analysis of the latest data from the Australian Taxation Office (ATO) and the Australian Prudential Regulation Authority (APRA).

The comparatively heavy exposure of industry and public sector funds to unlisted assets has been a feature for most of the last two decades and the latest analysis from WealthData confirms a continuation.

The latest data analysis comes against the background of the Australian Prudential Regulation Authority (APRA) reportedly placing pressure on superannuation funds to ensure their unlisted investments are appropriately regularly revalued.

The reports pointed to an APRA draft practice guide urging funds to “consider the potential impacts on beneficiaries of selling assets at a stale price”.

The analysis, undertaken by WealthData principal, Colin Williams shows that while unlisted assets making up 21.7% of industry fund allocations and 21.5% of public sector fund allocations, they represent just 4.5% of retail fund allocations.

The relatively large exposure to unlisted assets by industry funds has been criticised by some financial advisers who argue that they tend to disguise performance because they are not frequently marked to market.

Importantly retail funds outpaced industry funds in their recovery from the Global Financial Crisis (GFC) because of their heavy exposure to equities.

The WealthData analysis shows that, currently, retail funds exposure to equities stands at 58.1% of total allocations, compared to 51.5% for industry funds and 54.5% for public sector funds.