POWERED BY MOMENTUM MEDIA
Half of small super funds facing sustainability challenges
Analysis by the Australian Prudential Regulation Authority (APRA) has found half of small superannuation funds, those with less than $10 billion in assets under management, are facing sustainability challenges.
The regulator said smaller superannuation funds were more likely to struggle to deliver quality and value-for-money for members. They also faced sustainability challenges as result of declining cashflow and member accounts.
On the other hand, funds with more than $50 billion were able to spread their costs over a wider membership base and keep fees lower. This meant operating expenses were around 0.33% of net assets compared to 0.57% for smaller funds.
APRA said mergers since the release of the first MySuper heatmap in 2019 had delivered combined total fee savings of around $21 million per annum for 350,000 MySuper members while simplification programs had delivered fee savings of almost $16 million per annum.
APRA member, Margaret Cole, said: ““While bigger isn’t always better, increased scale makes it easier for trustees to build an efficient and resilient business model that delivers strong financial outcomes for members.
“A fund that is losing members or has declining net assets will face challenges to keep fees and costs low for members, and fund operational improvements that ultimately benefit members.
“It’s for this reason that APRA will continue to encourage trustees facing performance or sustainability pressures to seek a strategic merger that can quickly deliver improved outcomes to their members.”
AUTHOR
Laura Dew
Laura Dew is editor at Super Review. Prior to joining SR, she spent five years working at Investment Week in the UK covering asset and wealth management.
Recommended for you
Governor Michele Bullock took a more hawkish stance on Tuesday, raising concerns over Donald Trump’s escalating tariffs, which sent economists in different directions with their predictions.
Equity Trustees has announced the appointment of Jocelyn Furlan to the Superannuation Limited (ETSL) and HTFS Nominees Pty Ltd (HTFS) boards, which have oversight of one of the companies’ fastest growing trustee services.
Following growing criticism of the superannuation industry’s influence on capital markets and its increasing exposure to private assets, as well as regulators’ concerns about potential risks to financial stability, ASFA has released new research pushing back on these narratives.
A US-based infrastructure specialist has welcomed the $93 billion fund as a cornerstone investor.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Global X GlobalX FANG+ ETF
33.51 3 y p.a(%)
2
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.62 3 y p.a(%)
4
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
5
Fidante Credit Suisse Global Private Equity
29.60 3 y p.a(%)
