The $500 billion blind spot in your super

Every year, you receive your superannuation statement, which shows a neat percentage return with a gently sloping chart. It feels safe, professional and out of sight. But have you ever asked yourself what's happening behind that smooth trending line, because a lot has changed.

Australian super funds now have around $500 billion invested in private assets, including infrastructure projects, office buildings, private companies, and private loans.

These are not assets you can easily buy or sell on a stock exchange. In many super "Balanced" options, private investments make up between 10 and 30% of the portfolio, with the largest funds at the higher end. Yet, 20 years ago, super was mostly listed shares and bonds you could price instantly. Today, private assets play a much larger role.

Unlike shares, private assets do not trade daily. Their values are estimated using models or external assessments and updated periodically. So, when markets swing sharply, listed shares move immediately, but private investments often appear smoother on paper, even as underlying conditions weaken.

Regulators have taken notice. The Australian Securities and Investments Commission has raised concerns about inconsistent valuations and disclosure standards.

During COVID and the recent commercial property downturn, losses in private assets existed before they showed up in member statements.

There is also the issue of liquidity. You can switch super options daily, but infrastructure projects and large buildings cannot be sold quickly without significant losses. In stressed markets, that gap matters.

Now, there's another layer: the recent CFMEU controversy. The Construction, Forestry and Maritime Employees Union has faced allegations relating to misuse of influence and governance failures linked to major infrastructure projects.

If cost blowouts or governance issues affected project economics, and super funds invested at inflated valuations, members could ultimately bear the impact. Think about it: if assets were purchased at premiums that do not reflect their true economic value, what happens when they are eventually repriced?

This is not the first time super funds have been exposed to private market risks. Cases such as Shield Master Fund and First Guardian Master Fund show how complex structures and weak oversight can lead to significant losses. The takeaway is not panic; it's awareness.

Do not assume your super is automatically safe because the chart looks smooth.

Check where your money is invested. Understand how much is allocated to private assets, and if your fund allows, consider whether a self-directed option provides greater transparency and control, because sometimes the real risk is not what you can see, it's what you can't.

What are the best and worst-performing sectors this week?

The best-performing sectors include Information Technology, up more than 9%, followed by Energy, up more than 4% and Communication Services, up more than 3%. The worst-performing sectors include Real Estate, down slightly under 1%, followed by Consumer Discretionary and Utilities, both up less than half a per cent.

The best performing stocks in the ASX top 100 include HUB24 Limited, up more than 28%, followed by Netwealth Group, up more than 25% and Technology One, up more than 22%. The worst-performing stocks include Treasury Wines Estate, down more than 9%; followed by Whitehaven Coal, down more than 6% and IGO Limited, down more than 5%.

What's next for the Australian stock market? 

The All-Ordinaries Index has seen buyers firmly in control this week, closing up just under 2% on Thursday. Strength continued from the heavyweights, including the banks and Materials sector, but it was Technology that stole the spotlight, surging 9% for the week.

Encouragingly, every sector except Real Estate finished in the green, signalling a broad-based rally on growing investor confidence.

Technically, a major moment is unfolding.

For weeks, we've highlighted the significance of the 9300 level as the key barrier standing between the market and a potential new all-time high. Yesterday, the index closed at 9316, which is a strong statement, but not confirmation just yet.

On recent attempts to break higher, Friday saw sellers step in and reject the move, making today critical. If buyers can defend the 9300 level into the close, it could mark the launchpad for the next bullish phase heading into the second half of the year.

For now, discipline remains key during reporting season.

Focus on stocks with strong momentum, backed by solid fundamentals, and sidestep earnings landmines. If 9300 holds, trend opportunities could accelerate quickly.

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