POWERED BY MOMENTUM MEDIA
Undue attention on super fees: SuperRatings
There is an unjustified spotlight put on superannuation fees, with insufficient attention paid to overall investment outcomes for fund members, according to SuperRatings.
In its analysis of key trends and issues in the super industry, SuperRatings said ‘net benefit to members' is the most important indicator of member outcomes.
"While competitive fees and charges are important, the quality of fee disclosure across the industry is extremely varied," SuperRatings said.
"In SuperRatings' view, whilst fees are important, a race to the bottom in terms of fees is unlikely to deliver better outcomes for superannuation fund members."
Net benefit to members is an effective measure because it is the level of investment earnings minus fees and taxes. This also allows for comparison between active and passive structures, and sees whether a provider has added excess value to their members' accounts after fees and taxes.
The comments come even as the Financial System Inquiry argued the super system is not operating efficiently because of a lack of strong price-based competition, and consequently the industry is not able to enjoy the benefits of its scale.
"These benefits have been offset by higher costs elsewhere in the system rather than being reflected in lower fees," it said.
The inquiry also said if average fees in APRA-regulated funds came down 30 basis points, member balances and funds available for long-term investment would jump by more than $3.5 billion per annum.
Looking forward, SuperRatings believes funds will devote much of their time to assessing service providers, particularly administrators, custody and insurance providers.
"Administration continues to be a key challenge in the industry, with a lack of automation and a reduction in the number of active providers evident," it said.
It added insurance also remains a point of concern for funds, as premiums go up due to worsening claims experience and the rise of lawyer participation.
Recommended for you
Governor Bullock took a more hawkish stance on Tuesday, raising concerns over 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(%)
