A new report “from the coalface” of super fund investing has gone some way to quantifying the cost of shonky investment management, with members potentially losing out on hundreds of thousands of dollars.
Surging equity markets have driven the Future Fund’s return higher, but its prediction that inflation will be stickier than expected has been born out and it “remains conscious of the potential for significant deterioration”.
Not-for-profits score best in SuperRatings results
(Pictured: Jeff Bresnahan)
Not-for-profit funds have dominated the top ranks for super fund returns in the year to June, according to figures released over the weekend by SuperRatings. Corporate fund Telstra Super had the best performing balanced, growth and Australian shares options of the top 50 funds.
The median return for balanced options among super funds for the year was 12.7 per cent. Telstra returned 15.8 per cent, followed by Intrust with 14.0 per cent and UniSuper with 13.9 per cent. The only for-profit funds in the top 20 of that category were Plum at 17th and the Aon mastertrust at 19th.
For growth funds, Plum was the only for-profit fund in the top 10, at number seven, and for capital stable options, Aon was the only for-profit fund, coming in at number six. VicSuper had the best-performing capital stable option with a return of 10.8 per cent.
While this is probably not statistically relevant, it would seem that size has been no impediment to returns over the past year. The $65 billion AustralianSuper was the second best performer among growth options and the $25 billion REST the second best among balanced options.
It should be noted that there are 35 not-for-profit funds in the survey and 15 for-profit funds, which is likely to skew the comparative findings slightly towards the not-for-profit funds.
Jeff Bresnahan, SuperRatings founder and chair, said: “Over a 22-year period since the introduction of compulsory superannuation, Australian funds have returned 7.2 per cent per annum. This is a real positive for members and goes to show that, despite all the peaks and troughs we’ve seen since 1992, superannuation funds have generally succeeded in providing returns to members of over 3.5 per cent above inflation”.
He said: “While superannuation funds should be commended for this great result, there remains work to be done to ensure members have the best possible chance to achieve their retirement goals. There is increasing recognition across the industry that some members have been faced with poorer outcomes due to the timing of their retirement or poorly performing products…
“As a result, it is pleasing to see that there is a greater discussion of different member’s needs, particularly those members around retirement, emerging. Going forward, it is vital that superannuation funds continue to better understand the different needs of their members and it is pleasing to see many funds challenging the status quo in this regard. A case in point is the need for a greater focus on retirement outcomes, which was highlighted prominently in the interim Financial System Inquiry handed down recently from chairman David Murray. We’re increasingly seeing funds begin to develop strategies to promote better retirement outcomes for members and this more than anything, will drive the success of the Australian superannuation system going forward.”
