On 16 June, 2026, the EDHEC Infrastructure & Private Assets Research Institute (EIPA) submitted comments to the Australian Treasury Consultation Paper released in May 2026 seeking feedback on a number of proposals to strengthen the superannuation performance test.

EIPA’s submission, which focuses primarily on the benchmarking treatment of private assets, is summarised below.

Key points

EIPA welcomes the opportunity to respond to Treasury’s consultation on strengthening the superannuation performance test. Our submission focuses on Options 1 and 2, which concern how certain emerging and alternative assets are classified and benchmarked, particularly with respect to the use of absolute benchmarks such as CPI + X. Further, we comment on some of the challenges with the proposed use of a simple reference portfolio as a benchmark at the total portfolio level. EIPA’s comments take into consideration the demonstrated success of the performance test to date, while seeking to address two of the main concerns identified in the consultation paper: the performance test’s potential to incentivise benchmark hugging and constrain investment choices to those asset classes well captured in benchmarks.

Our view is that the correct way to assess unlisted and emerging alternative assets¹ within a performance test is through asset-level, marked-to-market, asset class benchmarks. Absolute return benchmarks and simple reference portfolios will not address the concerns over benchmark hugging and limiting investment choices, and may exacerbate them. Absolute benchmarks, such as CPI + X, do not capture the risk of investing in venture capital, renewable energy, social infrastructure, or other asset classes with market exposure. Actual performance is likely to vary significantly from the benchmark due to misspecification, thus encouraging the precise behaviour that the tests are seeking to avoid.

Similarly, at the total portfolio level, using a simple reference portfolio comprised of listed equities and bonds will fail to capture the risk and return dynamics of unlisted assets such as private equity, private infrastructure, and private credit, leading to perceived over/under performance when listed and unlisted markets diverge, a scenario that has played out over the last three years in private equity.

We discuss the specific challenges of using an absolute benchmark such as CPI + X, and why it is unlikely to address these concerns. Instead, EIPA proposes benchmarking these assets against the most appropriate private asset class index, marked to market, to capture the risk and return dynamics of the relevant asset class. This would help address the tracking error that arises when invested asset classes are not well represented in the strategic asset allocation benchmark portfolio. By expanding the benchmark portfolio to include additional private asset class indices, EIPA believes the incentives around benchmark hugging would also be reduced.

📥Full EIPA submission: Strengthening the Superannuation Performance Test: Response to the Treasury Consultation Paper (May 2026).

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Footnotes:

¹Here we refer to the asset classes provided as examples in the Consultation Paper (Venture Capital, Renewable Energy, Social Housing). This is to distinguish from the alternative asset classes in APRA 550.0 that include various hedge fund strategies, commodities, and insurance linked credit.