It is one of life’s unavoidable ironies: plumbers’ homes have leaky taps, mechanics’ cars break down… and journalists who write about super all day have accounts that are in disarray.
Before embarking on a successful career with Investment & Technology, Unbalanced endured a series of unsuccessful jaunts in a variety of professions. Subsequently, we now have a couple of hundred dollars in the eligible rollover fund, Super Safeguard. The forms to consolidate the money into an industry fund were filled out long ago, but in the everyday hustle and bustle, they only made it to the post office in December ‘07.
As of last month there’d been no reply, so we made a call to Safeguard headquarters and found out why they might have been avoiding us – for the past three years, Unbalanced’s balance had earned a zero crediting rate. The teenager at the call centre explained that Safeguard uses all of its investment returns to manage the accounts and make sure they are not eaten away by fees. At least we knew our money was there, being “safeguarded” for the day they finally granted our rollout request.
A few days later, however, we received a “significant event notice” from Safeguard informing us that we would receive only 70 per cent of our account’s value back. The fund had placed a hold on withdrawals last November, following the liquidation of one of its managers.
It turns out that 28 per cent of Super Safeguard’s $20 million in funds under management had been invested with stricken hedge fund manager, Absolute Capital, in the Absolute Capital Yield Strategies Fund. Super Safeguard, under the auspices of it trustee, Trust Company Superannuation Services Limited, had somehow come to the conclusion that a 100 per cent exposure to credit securities was the best way to “safeguard” its members money. The entire portfolio had been managed by four hybrid fixed interest managers; Spectrum, Credit Suisse, Goldman Sachs JB Were, and Absolute Capital.
The fund’s asset consultant, Atchison Consultants, says it had a view that credit offered a suitable investment, given the objectives and five-year-view of the fund. The asset allocation has since changed; now 40 per cent is in hybrid fixed interest, 40 per cent is with balanced managers, and 20 per cent is being kept in cash.
The kid at Safeguard’s call centre is adamant we will get all of the remaining 30 per cent of our money “as soon as the value in the Absolute Capital Fund has been confirmed”. We asked him three times.