In its submission to ASIC, IFM Investors – an asset manager owned by 15 superannuation funds and the UK’s member-led pension fund Nest – said any new reporting rules must balance the public benefit of more transparency with the cost of compliance.
Responding particularly to the regulator’s stated intention to make new data it collects publicly available, IFM cautioned that some data, such as current valuations of private market assets, are commercially sensitive.
“If this data were in the public domain when an asset is being sold, potential buyers would know the exact price they should bid, rather than let that price be set by market conditions,” IFM said.
“Reduced prices because of mandated public disclosure of valuations would damage the financial interests of investors, such as superannuation funds and ultimately fund members. They could also reduce the attractiveness of investing in private markets, meaning less capital may be available for infrastructure and other private businesses”.
Highlighting the government’s 2021 decision to abandon plans to compel super funds to disclose specific asset values under the Portfolio Holdings Disclosure framework, IFM noted that the move reflected concerns such disclosures would undermine members’ best financial interests.
On its own valuation policy, IFM said it “supports regular and rigorous valuation processes and a governance structure that ensures potential conflicts are recognised and managed”.
“This is designed to be consistent with APRA guidance, international valuation standards and other applicable regulatory settings,” the asset manager said.
“We consider robust valuation processes to be critical to supporting the integrity and efficiency of private markets, and to our capacity deliver appropriate outcomes for our owners and clients. For example, conducting robust valuations is critical to the integrity of reported unit prices for superannuation funds’ investment options.”
IFM further added that it conducts regular valuations across asset classes, with infrastructure private equity, and real estate assets typically assessed quarterly by independent external valuers. Private credit assets are valued monthly and all valuations are subject to audits and shared with investors through regular reporting.
“In addition to regular valuations, assets may be subject to out-of-cycle valuations,” it added.
Super funds fill Australia’s infrastructure gap
In its submission, IFM Investors also highlighted that superannuation funds are playing a critical role in closing Australia’s infrastructure gap by ramping up investment in unlisted infrastructure assets.
Drawing on its own exposure to this area of the private markets’ universe, IFM flagged the widening disconnect between infrastructure and public funding capacity – especially in housing and energy – and the increasing importance of unlisted infrastructure in fund’s portfolios.
“Australia is at risk of a growing ‘gap’ in infrastructure investment relative to Australia’s significant infrastructure needs, particularly in areas linked to housing and energy,” IFM said.
“In the decade to 2024, the value of allocations to unlisted infrastructure among funds regulated by APRA increased more than three times. This is partly because infrastructure has several properties, making it well suited to portfolios supporting superannuation fund investment, aligning it with the objective of superannuation.”
It also added that private infrastructure offers strong risk-adjusted returns, inflation protection, low volatility and correlation and stable income linked to essential services, making it a resilient and diversifying asset for retirement portfolios.
