Hidden Super Fund Risks: Why the CFMEU News Affects You

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 per cent 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.

What’s really happening inside your super fund?

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.

Why the CFMEU headlines should concern you and your super fund

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 were the best and worst-performing sectors last week?

The best-performing sectors included Information Technology, up 6.12 per cent, followed by Energy, up 4.01 per cent and Industrials, up 3.12 per cent. The worst performing sectors included Consumer Staples, down 1.04 per cent, followed by Real Estate, down 0.90 per cent and Consumer Discretionary, down 0.61 per cent.

The best performing stocks in the ASX top 100 included HUB24 Limited, up 28.77 per cent, followed by Netwealth Group, up 21.43 per cent and Technology One, up 20.50 per cent. The worst-performing stocks included Whitehaven Coal, down 9.01 per cent, followed by Treasury Wines, down 7.35 per cent and IGO Limited, down 5.25 per cent.

What's next for the Australian stock market?

The All-Ordinaries Index finished last week with buyers firmly in control, rising just under 2 per cent. Strength once again came from the heavyweight Banks and Materials stocks, but it was Technology that stole the show, rallying 6 per cent for the week. Even more encouraging was the breadth of the move, with around 70 per cent of sectors closing higher: a clear sign that confidence is broadening beyond just a handful of large caps.

From a technical standpoint, the market is approaching a defining moment. For weeks, we’ve highlighted 9,300 as the key barrier to the index's potential move to fresh all-time highs. Last week it closed at 9,316, which is a strong statement, but not yet confirmation. We saw a similar close at 9,317 back in August last year, and history shows that sellers have consistently defended this level. This is now the second-highest attempt to sustain trade above 9,300, which makes the coming sessions critical.

If buyers can successfully defend 9,300 this time, it may well become the launchpad for the next bullish phase into the second half of the year. Until then, discipline remains essential during the reporting season. Stick with stocks showing strong momentum and solid fundamentals, avoid earnings traps, and be ready, because if 9,300 holds, trend opportunities could accelerate quickly. 

For now, good luck and good trading.

Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online.

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