Submission to inquiry into Treasury Laws Amendment (Your Future, Your Super) Bill 2021 [Provisions]
Private capital fund managers invest billions of dollars into Australian
companies every year. The private capital investment asset class has
delivered investors an average net return after fees of 12.5 and 12 per
cent per annum, over the past 10 and 20 years, respectively.1 This strong
performance has provided Australian superannuation funds with superior
returns and valuable diversification. In response, Australian
superannuation funds have increased their investment into and alongside
private capital funds.
* 15-year average for March and June 2018
Source: Cambridge Associates Benchmark Data
The private capital industry is supportive of adopting the current proposal
which would see unlisted private capital investments benchmarked against
listed equities. It is important to acknowledge, however, that given the
uncertainties which surround how investment decision making will be
impacted over the short and medium-term by the introduction of these
reforms, it would be prudent for the government to ensure the implications
are monitored in real time; this includes the allocation of funds.
The Council urges the Committee to consider the merits of assessing
performance on a net of ‘total fees’ basis, in line with APRA’s heatmap
approach.
Some of the detail of the reforms will be contained in the forthcoming
regulations. It is vitally important that the regulations are drafted to
achieve the Government’s intent without imposing unnecessary costs or
generating unintended consequences. For example, the portfolio holding
disclosure exemption has protected member value by not requiring
superannuation funds to make public commercially sensitive information,
where doing so would be detrimental to the interests of members. In this
instance, how the regulations balance the need for transparency with the
need to protect member value will be important.
Click here to view the submission.
1 Cambridge Associates, Australia Private Equity & Venture Capital Index and Selected Benchmark Statistics (Q2 2020)