Super Trustees and Redemption Restrictions in Underlying Investments

April 2020
Regulatory & Governance
Funds Management

ASIC’s letter to responsible entities of managed investment schemes (click here) is also relevant to superannuation trustees that invest directly or indirectly in managed investment schemes to implement pooled investment option strategies or as part of a platform offering, allowing superannuation members to choose a particular managed investment scheme.

The actions of responsible entities in relation to such schemes necessarily has flow on implications for super trustees exposed to those schemes.

Superannuation trustees should ensure they are receiving prompt reporting from managed investment schemes in relation to actions they have taken, or propose to take, which may limit redemptions from the scheme.

Depending on the action taken, a super trustee may be required to issue significant event reporting to affected members, for example, members who have already chosen to invest in a particular scheme available from a platform’s investment menu.  There should also be a heightened focus on ensuring that product disclosure statements made available by a super trustee in relation to schemes listed on a platform’s investment menu are up to date (pursuant to ASIC relief relating to section 1012IA of the Corporations Act).

During the GFC, liquidity issues affecting super fund investments in underlying managed investment schemes triggered various notifications by super trustees to members, portability relief applications and other regulatory actions relating to the adequacy and timing of disclosures to members.  It’s likely the current investment downturn will do the same.

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