POWERED BY MOMENTUM MEDIA
APRA signals more super fund exits
The Australian Prudential Regulation Authority (APRA) has signalled that industry funds may be amongst the under-performers which are ultimately weeded out of the industry in circumstances where there are some retail funds which outperform industry funds and vice versa.
At the same time as confirming how APRA utilised performance and other related data to put pressure on a number of funds to exit the industry, the regulator’s chairman, Wayne Byres downplayed Productivity Commission (PC) suggestions that the industry funds sector had consistently outperformed retail describing it as an average outcome that was “not particularly helpful”.
He said that there were a lot of generalisations made from high level data and that when APRA dug down on that data the picture was much more complex and much more nuanced.
After stating in his opening address to Senate estimates that 13 funds had opted to exit the industry, Byres said the regulator had used that data to identify the cohort of funds who seemed to be underperforming across a number of different measures.
“We've used that [data] to put pressure on those funds to lift their game in some shape or form,” he said. “As I said, in about half of those cases, putting that data in that compelling way in front of trustees has meant that the trustees have decided that the best thing they can do for their members is hand them over to someone else and exit the industry.”
“So, I don't think there is any lack of curiosity about what's in the data,” Byres said.
Byres said that it was APRA’s intention to intensify its work around its member outcomes project and agreed this would include an assessment of industry, public sector, corporate and retail funds.
“That's essentially what we're doing at present,” he said. “In the work we did on member outcomes, we picked a bottom cohort, but we're essentially using all APRA funds, running them through on a range of metrics, ranking them and finding the ones that ranked performing across a number of dimensions. They were, if you like, our first hit list. Having worked through those, now we've got to come back and look at the next lot.”
Recommended for you
Super funds had a “tremendous month” in November, according to new data.
Australia faces a decade of deficits, with the sum of deficits over the next four years expected to overshoot forecasts by $21.8 billion.
APRA has raised an alarm about gaps in how superannuation trustees are managing the risks associated with unlisted assets, after releasing the findings of its latest review.
Compared to how funds were allocated to March this year, industry super funds have slightly decreased their allocation to infrastructure in the six months to September – dropping from 11 per cent to 10.6 per cent, according to the latest APRA data.
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
31.73 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
30.15 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.71 3 y p.a(%)
I wonder whether it is a great idea to have only a few mega super funds. Will in create an unacceptable level of risk if a mega fund has a problem with no underlying capital to back stop a loss.