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PC’s top 10 funds could have unfair “liquidity advantage”
The Productivity Commission’s controversial ‘best in show’ default super fund list could prove unchangeable, as economies of scale see the 10 funds to first feature extend their lead over other funds’ performance as more people are defaulted into the listed options.
BT Financial Group chief executive, Brad Cooper, told delegates at the SMSF Association National Conference today that the list could become difficult to crack into, as “with the liquidity advantage that those funds then enjoy, you start to get improved performance just because of that”.
He said that there were issues with the proposal here as it would be very difficult for new entrants to get onto the list.
Speaking on the same panel, Mercer senior partner, Dr David Knox, also suggested that the funds to feature on the list were likely to all be similar, thus all suited to a similar type of member.
“The problem is you have some criteria [for funds’ selection to the list], and then those top funds are just clones of each other based on that set of criteria, and I’m not convinced that those are the best criteria for everyone in the workplace,” he said.
While the Productivity Commission acknowledged ‘best in show’ selection methodology should be based on more than just performance, with Cooper suggesting the governance could be one factor to also be considered, presumably similar styles of fund suited to that criteria would come out on top.
Despite the proposal’s flaws however, Cooper welcomed the shift from the current award default model: “[The recommendation’s] trying to move it away from ideological structures to be more performance-based, more out-come based,” he said.
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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
32.57 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
32.09 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
27.42 3 y p.a(%)
