Industry funds marginally outperform on unlisted assets
A key superannuation research and ratings house has confirmed that industry funds have been outperforming their retail counterparts amid the volatility which has marked the start of 2016 because of their exposure to unlisted assets the valuation of which lag markets by six to nine month.
The confirmation came from Chant West which said that the heavier allocation of industry funds towards unlisted assets has seen them marginally outperform their retail fund counterparts during February.
According to the Chant West research, industry funds and retail funds produced broadly similar results in February, with returns of -0.4 per cent and -0.5 per cent respectively, but the company noted that industry funds still held the advantage over the longer term, having returned 6.7 per cent a year against 5.4 per cent for retail funds over the 15 years to February 2016. It said performance over three, five, seven and 10 years was closer with retail funds actually ahead over seven years.
The analysis noted that industry funds' particularly strong outperformance over the year to February was mainly due to higher allocations to unlisted assets such as unlisted infrastructure, unlisted property and private equity.
It said these allocations had outperformed listed markets over the period.
"Australian and international share markets, which are down 13.4 per cent and 9.6 per cent, respectively, over the past year, are marked to market. However, unlisted assets are valued infrequently with their valuations typically lagging listed markets by six to nine months," the Chant West analysis said.
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