Funds battle SMSFs with direct investment options

Telstra Super will join a growing number of superannuation funds to release direct investment options in a bid to stem the flow of members leaving to start self-managed super funds (SMSFs).

The fund plans to make term deposits and direct equities available to members from next February.

DIY funds and SMSFs have nabbed 71 per cent of member funds due to Telstra Super's high average account balances, the fund's chief financial officer Christina Liosis said.

Club Plus Super will launch its direct equity offer in six months, after the success of its term deposit launch in March. 

VIEW ALL

View all

Club Plus chief executive Paul Cahill said $7 million in funds flowed to the term deposit platform from accumulation members over one week, while 20 per cent of pension members had transferred funds in the first three months of the product launch.

AustralianSuper's product manager of investments Paul Souter said direct equities was one of the fund's "best kept secrets". 

He said AustralianSuper's ASX200 offer had been available for about 12 years and had attracted 8,000 members and $190 million in funds, with limited or no advertising.

The fund has redesigned its offer and introduced term deposits, with the prime driver being the flight to SMSFs, according to Souter.

He said SMSF rollover represented about 5 per cent of the fund's members and 15 per cent of funds, and while AustralianSuper had developed a "compelling alternative" to SMSFs, he was not convinced it was the complete solution to the SMSF problem.

CoreData's Direct Investing report released in July found 48.7 per cent of respondents would be interested in investing in specific Australian shares and 47.3 per cent in terms deposits through their superannuation fund. A further 26.6 per cent would be interested in investing directly in pension annuities, it said.