September 22, 2009
Super funds invested in overseas property
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So where is the goverment investing the super funds. There is $13b in the super annuation fund. This is to pre-fund the pensions payable to the retirees. With number of baby boomers retiring, the government has to look for ways to keep its promise to give pensions when we retire. So the Government contributes about $2 billion a year to the fund and invests money already in the kitty in funds that give good returns. Firstly the current government has imposed a moratorium on its 'contribution' for the next 10 years. Shorn of the jargon it means that the goverment will no longer contribute to the fund. They hope that ten years later they will find enough money to do a catch up. That will be the day!
Secondly they have chosen a company called Franklin Templeton Investments, a firm based in USA (where else would it be?) to identify, filter and recommend investment opportunities. Currently $1.24b of the $13b super fund is invested in property managed by overseas fund managers. The governemnt wants to up the ante and increase the investment in property because it believes, in the words of the super fund general manager, Mike Whineray, property provides a STABLE AND PREDICTABLE CASH FLOW OVER THE LONG TERM INVESTMENT HORIZON.
Great news that even the Goverment believes what we ordinary folk do.
However just a small codicil–the fund manager is based overseas and has been forced by California Attorney General to pay $18 million as a settlement for violating the state securities laws. The FTI did not give adequate details to the investors about the commissions and brokerages paid to financial advisors and brokers to recommend its funds. Here is what the attorney general said:
"Most mutual fund investors are families with modest incomes. They work hard for their money, and when they invest it they deserve to be told the whole truth so they can make informed decisions. That is waht our laws against securities fraud require. Franklin Templeton
violated those laws and the trust of the small investors".
violated those laws and the trust of the small investors".
Deja vu?
