Unlisted assets play an important part of your super, contributing to diversification by lowering your exposure to any one type of investment or overly similar asset class.

You may have heard about unlisted assets in super coming up as a topic of late, as new standards for the valuation of these investments came into effect on 1 January 2023 and are progressively being implemented. More on the changing regulations and what these may mean for your super below.

Are you across the difference between listed and unlisted assets, and the resulting returns that could mean a poor return versus a good one?

With $3.5 trillion now in Australia’s super system, there’s a big reason to care. Let’s draw a rough parallel. Most of us understand how tougher markets are impacting the value of our homes. But what does these market conditions mean for the value of the investments held in your super?

Here’s what you need to know about unlisted assets in your super fund. 

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”.

Where can I see my super fund’s unlisted holdings?

Under the Portfolio Holdings Disclosure regime, super funds must disclose information about the identity, value and weightings of its investments and portfolio composition. The information must be published on the fund’s website and updated twice a year.

How does CFS value unlisted assets?

We use external professional investment managers to value unlisted assets included in our investment options. We value unlisted infrastructure assets on a quarterly basis, sourced from audited independent valuations of the underlying assets which are revalued on a rotating quarterly and semi-annual basis.

Unlisted property assets are valued based on monthly valuations provided by the investment manager. Valuations of the underlying properties are conducted on rolling basis at least semi-annually with approximately 50% quarterly.  

CFS provides value and weighting of every holding in each fund investment option.