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Industry fund pioneers SMSF push
A major industry superannuation fund is changing its legal structure to allow self-managed super funds (SMSFs) to invest in its underlying investment platform.
SMSFs will be able to invest in HOSTPLUS' investment options once its plans to become a pooled superannuation trust (PST) are finalised later in the year, according to chief executive David Elia.
It will be the first industry fund to do so, according to a list of registered PSTs on the Australian Prudential Regulation Authority (APRA) website.
Elia said industry funds could play a role in keeping costs down for SMSFs.
"It will genuinely give SMSFs - and I think the planning industry out there - an alternative option.
"In the same way that the industry funds effectively took on the retail funds - and in many respects revolutionised the whole notion of super and drove costs down - we believe we have an important role to play in terms of doing the same thing with regards to the SMSF sector," he said.
Elia said super funds did not have the legal structure to take money from other super funds, only from individuals.
He said SMSFs would benefit from gaining access to the fund's underlying investment options at wholesale prices.
Scale allowed the fund to negotiate a lower fee structure and some index managers were 'fee-less', Elia said, allowing the fund to recently extend an eight-year fee freeze for members by a further two years.
"At the moment the traditional SMSF goes out there and buys, say, an index fund from one of the retail players, and they'll pay 100 basis points to get that 1 per cent, 2 per cent.
"At HOSTPLUS, some of our index managers don't charge any investment fees," he said.
Elia said HOSTPLUS had been poised to relaunch as a PST for quite some time, but had been delayed due to taxation issues.
A member direct option including ASX300, exchange-traded funds (ETFs) and term deposits will be added to its investment platform in March/April, Elia said.
HOSTPLUS aims to launch the new model in the latter half of 2013 if markets continue to deliver positive investment performance, Elia said.
However Graeme Colley, education and professional standards director for the SMSF Professionals' Association of Australia, said that while PSTs could bring down costs, often the entry price was too high for "mum and dad" investors.
He said he did not know of any SMSFs that would use PSTs.
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