Spaceship super fund brought back to Earth by ASIC

The tech-specialist superannuation fund, Spaceship, has been slapped with a $12,600 fine, as has Tidswell Financial Services, the trustee of the fund, for misleading claims made on the fund’s website in 2017.

Spaceship, which targets millennials through social media, is backed by the co-founder of Atlassian, Mike Cannon-Brookes, through his investment vehicle Grok Ventures and a host of other tech and fintech entrepreneurs.

As of June 2017, Spaceship had more than 6000 members and over $100 million in funds under management.

The new fund invests mostly in technology stocks, including the big-name tech stocks like Google, Facebook and Amazon; though, it also has a smaller portion of the portfolio invested in Australian blue-chips like the big banks and BHP.

Traditional super funds have a mix of assets with tech stocks only forming a very small part of the portfolio.

ASIC’s concerns relate to misleading claims about the “fundamental investment philosophy” of the Spaceship Super Fund’s “GrowthX” investment option made on the fund’s website last year.

Prospective members of the fund were told that: “We will fight to get you the very best assets in your portfolio…. We will measure companies in our portfolio based on their ability to provide defensibility of profits and high levels of product differentiation.”

ASIC said these statements misled because, at the time, 79 per cent of the fund was invested in index-tracking funds. These do not require assessment of the individual stocks that make-up the index.

The composition of the index is weighted according to the market capitalisation of each stocks in the index.

Index investing is cheaper than “active” management, where shares are bought and sold in the hope of outperforming the market.

Last year, the fund was forced to lower its fees after criticism it fees were too high.

Spaceship has also received criticism that such high exposures to tech stocks, which are notoriously volatile, could be risking fund members’ retirement savings.

“The accurate promotion of superannuation products is critical to enable Australian consumers to make well-informed financial decisions; particularly in this case given the Spaceship Fund was specifically targeting young investors,” ASIC deputy chair Peter Kell said.

ASIC said it was monitoring new entrants to the superannuation industry to ensure that marketing and promotional claims are consistent with the underlying features of the product.

“New entrants to the superannuation sector have the potential to offer benefits to consumers, but it is critical that they provide accurate and clear information, especially if they are targeting a younger demographic,”  Mr Kell said.

Fairfax Media is seeking comment from Mr Cannon-Brookes.

Source: The Canberra Times (10th April 2018)

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