Morningstar - Q2 2023 - 25

Failure to Disclose More than 40%
of Australian managed funds do not
report complete portfolio holdings.
100%
60
80
40
20
Source: Morningstar Research.
9
5
44
Not Reported
Monthly
Quarterly
Other
42
Morningstar study ranked Australia last out of
26 countries on managed funds disclosures.
Meanwhile, investors in the United States, Canada,
and the United Kingdom can go on asset
managers' websites and see how their money
is invested.
Some asset managers disclose without being
required to: Morningstar receives portfolios
for 42% of Australian funds monthly, and
another 9% quarterly. However, for 44% of funds,
Morningstar receives no portfolio at all.
We do our best to reveal the impact on Australian
investors, but we can only show what we
know. When big events happen-like the collapse
of Adani ADANIENT stock following a scathing
short-sellers report, or the downfall of China's
Evergrande 3333:HK-many investors don't know
their investment exposure.
into the spotlight, as rising interest rates fuel
doubts over the valuations of the private assets
held by super funds.
And there's no doubt that many superannuation
funds have embraced the use of unlisted assets.
Data from the Association of Superannuation
Funds of Australia shows, on average, MySuper
funds hold over 20% of assets in unlisted property,
infrastructure, and private equity.
" Australia has a compulsory superannuation
system, " Kennaway says. " So, if the government
is taking money out of your paycheck and
allocating it to super, I think it's incumbent on
them to enforce disclosure of what you're
actually invested in. "
If not just for the risks, investors should be
able to know if their super fund is investing in
private assets that align with their values.
" People have considerations about exposure to
environmental issues or social issues, be
it alcohol or tobacco, " Kennaway says. " It's your
money, you should know where it is. "
Managed funds have even fewer disclosure
obligations-that is to say, none. In fact, a
" With most funds, asset managers will have
the top 10 holdings on their website, but the
top 10 holdings don't tell the whole story, "
Kennaway says.
The reasons asset managers give for not
disclosing more are implausible, Kennaway says:
" Every other market has obligations, and they
disclose their holdings with a lag, so what
goes to market might be two, three, six months
old. So, the arguments about administrative
burden and sharing IP just aren't credible from
a Morningstar perspective. "
Sarah Dowling is the editorial manager for
Morningstar Australia.
We've lowered Panasonic Holdings' 6752:JP
fair value estimate to JPY 1,400 from JPY 1,450,
and Casio Computer's 6952:JP fair value
estimate to JPY 1,650 from JPY 1,800. However,
we're maintaining Sony Group's 6758:JP fair
value estimate per share at JPY 14,500 and
increasing it for the ADRs to $110 from $100 due
to the stronger yen.
As indicated by our new fair value estimates, we
believe that Casio is the most vulnerable to
changes in the business environment, leading to
the largest downward revision in its earnings
forecast. On the other hand, Sony has been able to
minimize the impact of the economic slowdown
thanks to structural reforms implemented by
current management. We believe that Sony is the
most attractive of the three consumer electronics
companies from a risk/reward perspective,
although we believe that all three stocks are
undervalued and have 20%-30% upside to their
respective fair value estimates.
Despite the economic slowdown, Sony's
December-quarter operating income exceeded
our expectations. That's mainly due to the
electronic products and solutions segment
maintaining a double-digit operating margin on
the back of digital cameras, and the game
and network-services segment improving
its operating margin to 9.3% from 5.8% in the
September quarter, in part because of the
blockbuster success of God of War Ragnarök.
We expect Sony PlayStation 5 console shipments
to improve as semiconductor supply constraints
ease, expanding margins in the segment.
We also expect solid growth in the image sensor
business as demand for improved image
quality in smartphone cameras remains strong.
Sony Still a Top Pick
Japan
ASIA
Based on weaker demand and a change
in currency assumptions, we have updated
our earnings forecasts for three consumer
electronics companies as of March 27.
morningstar.com/products/magazine
25
Kazunori Ito is director of Japan and technology research
for Morningstar Investment Adviser Singapore Pte Ltd.,
a fully owned subsidiary of Morningstar, Inc.
Disclosure Frequency
https://www.morningstar.com/stocks/xtks/6752/quote https://www.morningstar.com/stocks/xtks/6952/quote https://www.morningstar.com/stocks/xtks/6758/quote https://www.morningstar.com/stocks/xnse/adanient/quote https://www.morningstar.com/stocks/xhkg/06666/quote https://www.morningstar.com/authors/2060/kazunori-ito http://www.morningstar.com/products/magazine
Morningstar - Q2 2023

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