Assessing the Recently Failed Superannuation Fund: Lessons and Next Steps

In early July 2025, the Australian Prudential Regulation Authority (APRA) confirmed the winding up of the First Guardian Master Fund, after ASIC and the Federal Court intervened on concerns of illiquid and conflicted investments. Withdrawals had been frozen since May 2024, leaving some 6,000 members unable to access around $590 million in super balances. The fund's responsible entity, Falcon Capital, saw its directors' assets frozen pending liquidation. Investigations uncovered that advisers had rolled funds into complex structured products without fully disclosing risks, triggering calls for tighter governance and transparency across retail and master trust offerings. A related vehicle, the Shield Master Fund, also collapsed under similar circumstances, impacting at least 5,800 members and $480 million in assets. ASIC continues to probe potential breaches by platform trustees, including Macquarie and Equity Trustees, and is weighing legal action against directors and promoters for mismanagement and conflicts of interest. The fallout highlights that no fund—regardless of marketing or size—is immune to solvency or governance failures. Members must look beyond headline returns and assess a fund's underlying structure, risk controls, and transparency.

AustralianSuper is Australia's largest industry fund with over $300 billion in assets under management and 2.4 million members. Key reasons members choose it include: • **Economies of Scale and Low Fees**: Large membership allows for competitive fees, with administration and investment costs typically lower than retail or boutique options. • **Robust Governance and Oversight**: Governed by an independent board with employer, union, and independent directors, AustralianSuper maintains clear accountability, regular disclosures, and stringent APRA oversight. • **Diversification and Performance Stability**: Offers a range of diversified options—growth, balanced, conservative—that blend public and private assets, aiming for consistent returns over market cycles. • **Member Services and Support**: Comprehensive online tools, transparent reporting, and access to financial advice help members make informed decisions. These features exemplify how scale, governance, and transparency combine to reduce the chance of surprises and maintain member confidence.

While selecting a fund, critically evaluate: 1. **Regulatory Standing**: Check for any APRA or ASIC actions, breaches, or enforceable undertakings. 2. **Investment Liquidity**: Ensure the fund holds sufficient liquid assets to meet redemptions without fire sales in downturns. 3. **Fee Transparency**: Compare total expense ratios, including hidden or indirect costs, across options. 4. **Governance Records**: Review board composition, minutes where available, and public disclosures for conflicts of interest. If a fund exhibits concerning signals—sudden leadership changes, legal actions, unusual asset concentrations—consider exiting to a well-regarded, APRA-regulated option or the default MySuper choice until you complete due diligence.

If you're unhappy with returns or governance in retail and industry funds, a Self-Managed Super Fund (SMSF) offers direct control over investments and strategy. SMSFs can invest in direct property, shares, and tailored portfolios, but carry significant setup and compliance costs and fiduciary duties. For a full guide to SMSF setup—including pros, cons, costs, and suggested minimum balances—see our dedicated article: **"Setting Up a Self-Managed Super Fund: Pros, Cons, and Costs"** (link).