POWERED BY MOMENTUM MEDIA
Funds without scale need to be ‘very unique’ to survive
Small funds need to be very unique to deliver member outcomes if they do not want to merge to create a large fund, according to a panel.
Speaking on a Conference of Major Superannuation Funds (CMSF) online panel, Tasplan independent chair, Naomi Edwards, said it was clear when looking at member outcomes that very large funds were pulling ahead in terms of total return to members.
“The data is telling us that if you’re a funds with over $25billion in funds under management, your members get higher net returns for whatever the reason,” she said.
“Knowing this, trustees should really have a think about ‘should we target being in that group?’ because the data is very clear that very large funds are providing better member outcomes.”
However, Edwards noted that if funds had a “very unique value proposition”, and members were willing to pay for them, then it would be possible for a small fund to survive and thrive at its current scale because members valued their uniqueness.
“People often kid themselves in how unique they are I don’t think being a particular industry or geographic location makes you unique. If you have a unique value then you can be small,” she said.
“Otherwise you have to follow the numbers and the numbers show that larger funds for whatever reason are delivering better member outcomes.”
Also speaking on the panel, VicSuper chief executive, Michael Dundon, said that the challenge was for funds to recognise their model and position limitations.
“They need to let this go and be open to exploring new ways of operating their businesses whether that be an alliance, sharing resources, or a full-blown merger,” he said.
“They need to understand the benefits of scale and the fact that the very large funds are outperforming. I do think directors have a real obligation to consider the merits of a merger and form a view on a risks of not doing a merger.”
Recommended for you
Future Group is set to take on nearly $1 billion in funds under management (FUM) and welcome more than 100,000 new members following two significant successor fund transfers.
Insignia’s Master Trust business suffered a 1.9 per cent dip in FUA in the third quarter, amid total net outflows of $1.8 billion.
While the Liberal senator has accused super funds of locking everyday Australians out of the housing market, industry advocates say the Coalition’s policy would only push home ownership further out of reach.
Australia’s largest superannuation fund has confirmed all members who had funds stolen during the recent cyber fraud crime have been reimbursed.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
90.28 3 y p.a(%)
2
GAM LSA Private Shares AU I
37.08 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.44 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.12 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
28.28 3 y p.a(%)
"the numbers show that larger funds for whatever reason are delivering better member outcomes."
very insightful. How can you go to a conference and say bigger funds are better but we have no idea why...
oh boy. Is it that they credit returns to add onto lower years to even out returns...or simply scale means they can be flush with cash and get the best managed funds rates.
In the end, super is complex and administration is very, or too costly to make a huge margin for retail funds.