Australian Retirement Trust 31.5% in Unlisted Assets

wannagrababargain on 07/04/2025 - 11:57

When Elon recently bailed himself out by buying his own company with his shares in his other company with questionable valuations of both companies got me thinking about the chicanery of private equity. I was surprised to find out recently that in the High Growth option that Australian Retirement Trust has 31.5% in an amorphous and vague category of "Unlisted assets and alternatives."

Australian Super also invests in unlisted assets but at least they are a bit more transparent and break it down further into Private Equity, Property, Infrastructure and Credit.

Australian Retirement Trust on paper has had strong returns and I've witnessed their full tram ads purporting their strong track history. When you dig down into it, a third of that is attributed to 'unlisted assets' it seems like a convenient way to author your own return rate when you can pick and choose from any number of high risk unlisted assets to make your returns look good.

Just trying to find a list of what holdings ART has is more difficult than it should be. You need to click through multiple areas onto the Qsuper website and even then it's not clear. You finally get to a list of holdings and it's just holdings in other fund management firms like "PARTNERS GROUP" and "UNIGESTION SA" which basically ends up like financial inception.

In the aforementioned Elon deal, the banks recently sold off their debt for his original Twitter/X financing to third parties. This debt get packaged up and sold off into the financial markets, presumably bought up by suckers like these management firms and then by our super funds. Conceivably then it is plausible that members of Australian Retirement Trust and other super funds might hold some of Elon's toxic debt amongst other nuclear waste of the financial industry.

It's no secret that our regulators are asleep at the wheel. The lack of transparency that the super funds are allowed to get away with is shocking and I wonder if regular retail managed fund products could get away with this. I don't believe that the inherent liquidity risk of this strategy is adequately relayed to members either.

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Comments

  • MS Paint on 07/04/2025 - 12:01
    +2

    Thanks for the update.

  • Fredfloresjr on 07/04/2025 - 12:02
    +4

    Load everything to a random horse this Saturday. Thank me later.

    • tenpercent on 07/04/2025 - 12:07
      +1

      Better odds if you put everything on red.

  • mskeggs on 07/04/2025 - 12:16
    +12

    Are you arguing that a super fund, the epitome of long term investor, should only invest in equities and bonds?
    The unlisted assets are predominantly office blocks, shopping centres, toll roads and other infrastructure.
    I appreciate the super funds do get to mark these valuations to market in a reasonably subjective way, but it seems weird that you would want them only to invest in market assets - which have higher management and regulatory fees than unlisted assets.

    And I think likening it to musk's nonsense is pretty absurd.
    But you can vote with your wallet and choose a different fund, or even an SMSF and be very granular.

    • JimmyF on 07/04/2025 - 12:47
      +2

      But you can vote with your wallet and choose a different fund, or even an SMSF and be very granular.

      This…. Is the OP is so worried that a single dollar might be invested in one of Musks companies, then they should be going the self managed super option.

    • wannagrababargain on 07/04/2025 - 12:52

      I am not arguing against unlisted assets at all. I am just questioning the percentage, the transparency and the management of liquidity risk. I noted the Australian Super approach in comparison being more transparent instead of lumping it all into one amorphous "trust me" category.

      In normal retail managed funds, having 20% in unlisted assets or property makes it an 'illiquid scheme' so super funds have unique position here not afforded to retail funds. Although super is a long term view for an individual, the actual fund does need some liquidity for rollovers, lump sum withdrawals, First Home Super scheme, covid payouts and whatever else the government might cook up.

      I appreciate that the unlisted assets investments are in reality mostly in the areas you alluded to, my Musk inference was deliberately absurd just to help illustrate where a lack of transparency and regulatory oversight might end up.

      • mskeggs on 07/04/2025 - 13:26
        +1

        I actually agree with the risks around industry super investment in CBD office space, and they were exposed in covid as they took an inordinate time to appropriately value these assets.
        All the same, saying a retirement fund can't hold 31% of unlisted assets isn't the liquidity risk you think, imo.
        The vast majority of fund participants can't cash out, so the idea of a bank run is greatly reduced, and there is no barrier to funds providing a roll over in speccie rather than cash if an end-of-the-world liquidity crisis hit.
        Here is the certificate saying you own 0.000000007623% of CBD Towers Ltd that you can take to your SMSF. Arrange redemption in your own time.
        The government's primary goal is an orderly market, so they would be on the side of the funds in such a situation.

        Personally, i don't think there is any way to combat such a GFC-cubed event. Even if you held everything in crypto or gold or ammo, the government would be writing laws that forced you to bail in the banks, so you might as well participate in the financial economy and hope the superannuation system remains too big too fail (which it would - the gov would choose currency debasement before it accepted a super collapse).

  • huggsymersh on 07/04/2025 - 12:20
    +1

    You don't have to choose the preset options. I'm with ART and I've selected my own combination of indexes with my own weighting.

  • JimmyF on 07/04/2025 - 12:45
    +4

    When Elon recently bailed himself out by buying his own company with his shares in his other company with questionable valuations of both companies

    Such a strange statement, its hardly a bail out when you own BOTH companies and it was his money used. That's like you moving funds from one account to another. He didn't create money out of thin air or get a gov handout to do it, cough cough like GM, Ford, banks, airlines do.

    the banks recently sold off their debt for his original Twitter/X financing to third parties. This debt get packaged up and sold off into the financial markets, presumably bought up by suckers like these management firms and then by our super funds.

    Not sure why you think these people who brought it are suckers? Is the debt not being paid to date?

    Are you new to how debt is managed and sold off? Wait till you read up about the Subprime mortgage crisis! They had been real suckers!

    It's no secret that our regulators are asleep at the wheel

    They are fully awake, just like the gov is about housing crisis and culture dilution happening at a mass scale. They just don't care.

    • wannagrababargain on 07/04/2025 - 12:58
      -1

      Thank you for your comments. I was around during the subprime crisis :)

  • Dollar General on 07/04/2025 - 14:22
    +2

    The reason for the call today wannagrababargain is something just came across my desk. It is perhaps the best thing I have seen in the last 6 months. If you have 60 seconds, I’d like to share the idea with you

  • elgrande on 07/04/2025 - 14:36
    +1

    Thanks OP, good observation.

  • netjock on 07/04/2025 - 14:38
    +1

    Australian Super also invests in unlisted assets but at least they are a bit more transparent and break it down further into Private Equity, Property, Infrastructure and Credit.

    Unlisted doesn't mean the same as Elon's own bail out. It just means there isn't listed market with trading.

    Private Equity funds have maturity dates (like 7 years) then shareholders can either roll over into another fund or cash out. If private equity managers are any good then you want to roll over.

    Property. Your house is unlisted but it doesn't mean there is no buyers

    Infrastructure. Transurban is listed but there is unlisted version and if you are in it for the long term you want the cash flow and you can always find a buyer.

    Credit. That is like your home loan, it pays interest income at regular intervals and the principle is paid back. UK government issues 28 day gov bonds with discount to face value but they are not listed on the London Stock Exchange for trading.

    Unlisted isn't the issue. Whether the assets reflect the value assigned (valuation, this depends on investment team) or whether you can find a willing buyer (economy dependent). Super is the perfect vehicle to hold these types of assets.

  • serpserpserp on 07/04/2025 - 16:42
    +1

    In the aforementioned Elon deal, the banks recently sold off their debt for his original Twitter/X financing to third parties. This debt get packaged up and sold off into the financial markets, presumably bought up by suckers like these management firms and then by our super funds. Conceivably then it is plausible that members of Australian Retirement Trust and other super funds might hold some of Elon's toxic debt amongst other nuclear waste of the financial industry.

    That was a big leap with no evidence.

  • 6079 Smith on 07/04/2025 - 19:54
    +3

    I work for an unlisted company that ART own 93% of (or something like that), trust me it’s very well regulated and there’s lots of hoops. These guys know what they’re doing, they’re not about to buy some junk debt 2007 style

  • brad1-8tsi on 08/04/2025 - 08:17
    +1

    I joined MTAA Super in 2007. They'd been the most successful super funds for the previous 10 years. One of their selling points and reason for success was their direct investments in property and other "unlisted entities".
    When the GFC hit ALL super funds were told to get new independent valuations of their unlisted assets and valuations. Previously the valuations were mostly in-house.

    What a surprise, MTA Super experienced a decline of about 35% over 12 months as their "direct investment" portfolio was re-valued by independant analysts instead of the in-house crew. The CEO & 2 directors resigned in 2011 after an APRA investigation and a vote of no confidence in the CEO by the major shareholder(s).

    So yes, unlisted assets have the potential to be over-valued to make the returns look healthier.

    • tenpercent on 08/04/2025 - 08:26

      The CEO & 2 directors resigned in 2011 after an APRA investigation and a vote of no confidence in the CEO by the major shareholder(s).

      With their golden parachutes?

      • brad1-8tsi on 08/04/2025 - 08:30

        With their golden parachutes?

        Of course! Ditto when the AWARE Super dude left after wasting so much money on the financial planning company

  • cordsplace on 08/04/2025 - 16:55

    Just change your investment strategy. There are lots of options e.g. you would not want to be high growth at the moment.

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