Performance the issue not fees: AVCAL

11 September 2014
| By Nicholas |
image
image
expand image

The Financial System Inquiry (FSI) needs to focus on superannuation funds' performances rather than fees, the Australian Private Equity and Venture Capital Association Limited (AVCAL) believes.

In its second round submission to the FSI, AVCAL chief executive, Yasser El-Ansary, said that Australia was "trapped" in a policy and regulatory debate over fees and costs, while other developed economies were focused on net returns.

"The interim report form the inquiry directed much of its attention to fee competition within the superannuation industry, but what was missing was a comprehensive analysis of how the policy and regulatory system could change to shift more of the focus towards enhanced competition on net returns," he said.

"In the end, superannuation has to be about ensuring that the retirement outcomes of Australians are optimised, which is necessary in order to reduce the dependency of retirees on the age pension.

"And while keeping superannuation fees down is important, research has consistently shown that an optimal shown that an optimal diversified portfolio is framed around striking the right balance between a variety of asset classes — some of which might be low-fee, and others that offer high above-normal returns, such as private equity and venture capital."

AVCAL also raised concerns about what it described as the "relatively small" proportion of capital investment by super funds into domestic private equity projects.

In its submission AVCAL reported that Australian private equity had outperformed the S&P/ASX 300 Index by 185 basis points per annum over the last 15 years on a net-of-fee basis.

However, it estimated that just one per cent of the total current super savings pool, while other markets such as the US had an average allocation of about 10 per cent.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

11 months ago
Kevin Gorman

Super director remuneration ...

11 months 1 week ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

11 months 1 week ago

Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Co...

1 day 5 hours ago

Demand from institutional investors was the main driver of growth in Australia’s responsible investment (RI) market in 2023, as the industry continued to gain momentum....

1 day 5 hours ago

In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges....

1 day 6 hours ago