The Hidden Time Bomb in Your Super

If only!

There are hidden time bombs in many superannuation funds just ticking away waiting to wreak more havoc - which leads to the most important question of all - "Is YOUR fund one of them?"

Even if the share market goes up this year many super funds could actually go down significantly in value.

Respected jounralist Alan Kohler says superannuation funds, which had been showing good relative performance, "will change in 2009 because their diversification into unlisted assets over the past decade will start to work against them. Those in the superannuation business talk about little else these days.

It's simply because investments in direct property, direct infrastructure, hedge funds, and private equity are valued only periodically, often just once a year."

Kohlers article explains, "The listed versions of the funds' unlisted assets have all collapsed in value, but in many cases the unlisted valuations reflected in the value of the of the core fund have not moved, or even in some cases gone up. This is about to catch up with the funds in a big way."

So it is imperative that you protect yourself while you can!  The risk of staying in a superannuation fund with these dangerous unlisted assets is now incredibly high.

At Freeman Fox we have reviewed all our superannuation asset allocations and taken the tough decisions with our clients to lock in losses and get out of these explosive assets but that leaves thousands of our clients who don't have their superannuation with us in an exposed and potentially scary position.

To book a full review of your superannuation with an Adviser now please call us on 1800 000 369 - act now, by the end of April it may well be too late.

Amazingly, because of the nature of the valuations, if you take action now Kohler says "you will be overpaid by at least 10% for your fund units and make an instant profit of that amount."

Kohler goes on to say, "The allocations to unlisted assets varies widely of course, but a typical fund is roughly as follows: Australian direct property 7%; international direct property, 5%; international infrastructure 7%; Australian infrastructure 5%; absolute return hedge funds (growth) 3%; absolute return hedge funds (defensive) 3%; international private equity, 3%; Australian private equity, 1%."

These 'explosive assets' could make up 35% of your Super fund portfolio!

He explains "The usual practice is to value a quarter of these portfolios each quarter, which means each asset is valued once a year.

The valuations are usually done by the major accounting firms, and audited by another one of them once a year in July.

In the December quarter, the $6.8 billion ISPT core fund suffered a fall of $370 million, or 5.4% for the quarter, which seems to have been the first decline. IFM's Australian book was reduced by 5% in the December quarter and its offshore assets by 10%. Listed property trusts have fallen at least 50%. In many cases listed infrastructure funds have dropped by much more than 50%.

And then there are the hedge funds and private equity funds, as well as the super funds' own direct property and infrastructure investments (not via ISPT and IFM).

In many cases, geared hedge and private equity funds are now worthless because underlying asset values have fallen 50% behind a 60% gearing ratio. Many of these will only hit the super funds' core fund valuations on 30 June this year, when the unlisted portfolios are valued and audited."

This is potentially a dangerous position for hundreds of thousands of people who hold superannuation investments in balanced or default funds (a default fund is the fund of choice of your employer - or you - if you have not deliberately chosen a fund to deposit your superannuation into and remember unless you have screened your fund for these dangerous assets you are at risk of further significant falls in the value of your super fund.)

And worse, it's compounded by the reluctance of superannuation funds to act upon redemption requests from their clients (we've seen delays of up to 8 weeks!) - so you must act now.  Call Freeman Fox on 1800 000 369 and we'll book you in for a review with one of our advisers.

We'll look at your investment funds, suggest alternatives and help you make the changes.  We'll also help you ensure that you are maximising your tax benefits, and getting appropriate insurance cover as well.

Normally this consultation would be $980 but for a limited time we are offering it for free when you act upon our recommendations.

Don't get caught short, call us now on 1800 000 369 to book your consultation.

Superannuation is an amazing investment that is neglected by most Australians. Our system of mandatory regular contributions is the envy of almost every country on the planet and yet most Australians pay scant attention to the most regular and most important investment they have.  Let us help you correct that oversight. Call us now on 1800 000 369 to book your consultation.