Lessons To Be Learned From The Master Funds Collapse
By now you’ve probably heard about the First Guardian and Shield Master Funds’ collapse. It’s hit the news in a big way and has been quite the shock to Australians around the country. If you’re feeling lost on what has happened, what it means for affected individuals, and how you can safeguard yourself from devastating losses like these, you’re in the right place. We’re here to explain the intricate details of this collapse, so you can arm yourself with the knowledge you need in order to protect your own wealth-building efforts, prosperous future plans, retirement savings, and financial freedom.
What happened?
Essentially, thousands of Australians like yourself were told they could grow their superannuation exponentially quicker by moving from their usual fund into something a bit more exclusive. They were promised more control and better returns by moving their retirement savings into new “super platforms” that, unbeknownst to the fund holder, were investing heavily in high-risk projects like property developments, overseas loans, and unlisted companies.
At first, everything seemed great. Investors held deep trust in the idea that their money was safe because it was part of their superannuation. But then the economy shifted and these master funds took a turn for the worse, which then led to the collapse as we know it.
When we say the economy shifted, a few integral factors come into play.
For years, interest rates (not just in Australia but globally) were exceptionally low. It was cheap for companies and developers to borrow money. During this time, funds like First Guardian and Shield took advantage of the easy credit environment, pouring investors’ money into unlisted businesses, private loans, and property developments — all built on the assumption that borrowing would stay cheap and asset prices would continue to rise.
From 2022 onwards, interest rates began to climb… and they just kept climbing. Loans became more expensive, setting off a domino effect: developers could no longer afford to keep building or repay their debts, property values fell, and the “high returns” these funds had promised their investors quickly evaporated.
Liquidity also dried up. Those risky projects weren’t just losing value — they were illiquid, meaning they couldn’t be sold quickly or easily. So when investors or super platforms tried to withdraw their money, the funds simply couldn’t deliver.
As rumours spread that these funds were unable to meet their obligations, trust collapsed and so did new investment.
At the same time, a broader global slowdown in property development, rising construction costs, and tighter lending rules all compounded the issue. Here in Australia, cooling property and credit markets turned those ambitious projects that First Guardian and Shield had backed into financial sinkholes instead of the money-makers they were meant to be.
All of this culminated in the collapse of the First Guardian Master Fund and the Shield Master Fund, leaving more than 11,000 Australians, and around $1.2 billion in superannuation savings, in absolute limbo.
The word collapse is quite vague in nature, so let’s explain it.
When a fund ‘collapses’, it essentially means that the company or investment scheme that was managing people’s money has run out of cash, it can’t pay its debts, or its assets have lost too much value to keep operating.
In short? It failed financially.
In the specific cases of the First Guardian and Shield Master super funds, the collapse means that —
People cannot withdraw their superannuation or switch funds because the underlying investments can’t be easily sold or don’t hold enough value anymore.
A liquidator has been appointed to go through the books, sell off any remaining assets, and try to recover as much money as possible to pay back the investors. This process can take years and investors may only get a fraction of what they originally invested.
Regulators, such as the Australian Securities and Investments Commission (ASIC), are investigating whether the people running these funds, or those that were involved, acted dishonestly or negligently and if they find any evidence of such, there could be fines, court cases, or even criminal charges involved.
For those who had any of their superannuation invested through First Guardian or Shield — sadly, their retirement savings may have dropped dramatically because the assets the funds held have lost most of their value.
What updates do we currently have (as of October 2025)?
Currently, the estimated scale of losses collectively amounts to A$1.2 billion from about 12,000 investors.
ASIC has banned a Melbourne-based financial advisor, Jovan Videkanic (and others associated with the same firm), for giving misleading advice about Shield. After an investigation, he has been found to have directed clients into the Shield scheme’s high-risk options.
Additionally, ASIC has started civil court proceedings against the trustee Equity Trustees Superannuation Limited. They allege there was a failure in due diligence when allowing the schemes to be listed on super-platforms/trustees.
Australian Financial Complaints Authority, the complaint and dispute resolution body, has reinstated membership of the firm United Global Capital Pty Ltd (in liquidation) so that affected investors may access redress until 31 March 2026.
The frustration amongst investors is currently, and understandably, mounting and trustees and the board of Equity Trustees are facing a potential rejection of board remuneration because of such.
Additionally, the Albanese government recently met up with Donald Trump in Washington.
During this trip, they highlighted a projection that Australian superannuation funds will invest about US$1.44 trillion (around A$2.2 trillion) by 2035 into the United States economy. This is around a trillion U.S. dollar increase from the current level.
This means that your superannuation fund may ride more heavily on what’s going on in the United States — economically, regulatorily, and geopolitically.
This is happening while the Australian Prudential Regulation Authority (APRA) has publicly criticised superannuation trustees for their weak oversight of risky products in the superannuation system, especially when it comes to the collapse of the First Guardian and Shield Master Funds.
There’s some concern amongst analysts and opposition alike that the public promotion of these large U.S. investments could blur the lines between government diplomacy and independent investment decisions of super funds. However, APRA has come out and stated that the bar for oversight will be rising, so increased regulatory scrutiny will be coming into play when it comes to how investment options are selected and communicated.
As an Australian superannuation member, here’s a couple things to keep in mind about this:
Understanding your exposure is important. If your fund or investment option has large U.S. assets, you should be aware of currency risk, regulatory changes, taxes implications, and market shocks triggered by U.S. policy.
Don’t panic. Long-term investing is about the decades, not the daily news. The fact that Trump’s policies impact superannuation doesn’t mean you should change direction every time there’s political news, but you should stay informed.
Overall, what can we all learn from this collapse?
If you don’t understand what you’re investing in and it’s not clear or sounds too good to be true, proceed with caution.
Protect yourself by only investing in APRA-regulated funds, as they are closely monitored by the government.
Continually ask questions like, “Where is my money invested?” and “Who holds custody of the assets?”.
Check the fund’s Product Disclosure Statement (PDS) and APRA register. If you can’t find one, that’s a red flag.
Log in and check your superannuation account regularly. Make sure your contributions are showing up, your fund name hasn’t changed, and your insurance cover still fits your needs. Also keep an eye on your returns and asset allocation to make sure they align with your investment strategy.
Review your fund’s annual report and investment returns as a whole. If it is significantly underperforming the market without clear explanation, dig deeper into it.
Always follow updates from ASIC’s Moneysmart website for scam and fund warnings.
And lastly, consider establishing your own Self Managed Super Fund (SMSF).
This collapse has truly highlighted the dangers of handing over control to poorly managed trustees.
An SMSF gives you full control of how and where your retirement savings are invested, from shares and property to gold or ethical investments.
You have full reign of decision-making and you control where every dollar goes, leaving you less exposed and more protected against situations like this collapse.
We have a full blog on comparing Industry Superannuation Funds vs. Self-Managed Super Funds, feel free to read more about whether or not an SMSF is right for you here.
The First Guardian and Shield collapses are reminders that financial freedom isn’t just about growing your wealth, it’s also about guarding it from unexpected exposures.
By maintaining a sense of curiosity surrounding your superannuation, keeping things as transparent as possible, and building your own SMSF structure, you’re not just saving up for retirement and creating generational wealth, you’re also protecting your autonomy in a system that sometimes forgets how personal this all is.
Understanding your superannuation (where it sits, how it’s invested, and whether it’s aligned with the future you’re building towards) is simply smart finance. If you’re seeking guidance through this, especially after the news of the Master Funds’ collapse, FRE.DM Wealth is here to help you understand the in’s and out’s of your fund and to guide you through curating a structure that supports your retirement dreams and your individual vision of financial freedom as well. Reach out to us today to get the conversation started.
