POWERED BY MOMENTUM MEDIA
Investment fees driving up super costs
Industry superannuation funds may have administration and member fees that are around half as cheap as retail funds, but they are losing their advantage because of higher investment fees, according to new analysis released by Rainmaker.
The research has been headlined under the claim that Australians are paying up to $32 billion a year in super fund fees, an increase of 10 per cent over last year and four times more than the rate of inflation, with the average superannuation fund member paying 1.23 per cent of their account balance in fees, up from 1.17 per cent.
However, the research also noted that almost two-thirds of the fees charged by superannuation funds went towards investment management with the remaining one third going to fund administration.
Rainmaker executive director, Research and Compliance, Alex Dunnin said the changes in fee disclosure made it more important for members to understand what fees were for and what the fund offered.
"These changes have dramatically changed the comparative sticker price fees across the market with retail funds offering many of the lowest price MySuper products available,” he said, noting that while the headline fee might be lower for some products it was useful to look at administration and investment components off the fees separately.
"Products offered by not for profit funds still have administration and member fees that are on average 50 per cent cheaper than retail funds, but the fees for investment offsets this advantage." Dunnin said.
"However, investment fees vary according to what investment option the member takes up. Many funds offer low cost index options as well as higher cost, more active diversified options. Ultimately fees, particularly investment fees, should be seen in light of net investment returns and risk," he said.
SMSFs were again the lowest cost market segment with an average total expense ratio of 0.82 per cent.
Recommended for you
In this latest edition, Anna Shelley, CIO at AMP, shares the fund’s approach to current market conditions and where it continues to uncover key opportunities.
The mega fund has announced a $2.2 billion investment in a leading data centre platform, bringing its global real assets portfolio to nearly $60 billion.
In this latest edition, Australian Retirement Trust’s head of global real assets Michael Weaver explains the fund’s approach to finding new opportunities as it surpasses $300 billion in funds under management.
Fund managers remain hopeful for a Chinese revival story despite the “disappointing” stimulus package announced this week.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
32.57 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
32.09 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
27.42 3 y p.a(%)
Interesting article, but I would argue most who work in the industry would challenge the findings of this study and it would be very useful for you to go into some detail as to what you mean by investment fees and the data to support the findings. It bears no correlation of the fee compression the funds management industry has seen over the last 10 years so the question has to be asked... what data are you basing these findings as the headline is hugely misleading !