Last week, it came to light that Australian Retirement Trust (ART), the country’s second-largest super fund, has defaulted on AUD$457 million of debt linked to a US office building once occupied by Microsoft. At the time of purchase (pre-COVID, when the building was full of Microsoft staff), it probably looked like a great deal. Since then, interest rates have risen, and the office market has changed dramatically.
So, what can high net worth investors take from this?
Quite a bit, actually.
I see this a lot with clients.
An investment disappoints or loses money and they immediately start giving themselves a hard time.
But the truth is, everyone makes mistakes, including very large and well-resourced investors.
The key is not to avoid every mistake. It is to understand what went wrong, learn from it and try not to repeat it.
That is how better investors are made.
This was not simply a property deal gone wrong.
It was a debt deal that came undone in a higher interest rate environment. That distinction matters.
The real risk was not the building or even the tenant, but the leverage behind the scenes. Once Microsoft moved out and valuations fell, it was the debt holders who bore the brunt.
For me, this is a good example of why I remain cautious on private credit (you can read more on my views here).
This is one of the big lessons.
Direct investing in unlisted property, private deals or alternative structures often looks straightforward on the surface.
But underneath, there can be a lot going on:
Those risks do not always show up clearly in the pitch.
And they often only become obvious once something goes wrong.
Even the largest super funds make mistakes. I often see investments promoted in the wealth space on the basis that “big super is involved”. That’s not enough.
Managing risk, doing the work, and thinking independently is what protects wealth.
Super funds absolutely have an important role to play.
But they are not immune from structural issues.
ASIC has already raised concerns about weak valuations in unlisted assets, and that matters.
Add in broader industry pressures like the performance test, liquidity management and the sheer scale of money that needs to be deployed, and it is fair to say that investment decisions can sometimes be shaped by more than pure investment merit alone.
That does not mean super funds are “bad”.
It just means they should not be treated as infallible.
For me, this is a good reminder that no investor is infallible, no matter how large or well-resourced. The lesson is not to avoid risk altogether, but to understand it. As high-net-worth investors, we have the advantage of being nimble and thoughtful in a way that big super funds cannot always be. The best safeguard is a disciplined process: question assumptions, manage risk, and always keep learning from mistakes, both yours and others.
If you want an experienced, independent second opinion on your portfolio and the risks sitting beneath the surface, you can learn more about my independent Oursourced Chief Investment Officer (OCIO) service here.
Kind regards,
Shelley Marsh
Outsourced Chief Investment Officer (OCIO) & Founder
Wealth Differently
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