Retail funds lagging
06 October 2014
The Guardian reports that a submission from Industry Super Australia (ISA) to the financial system inquiry headed by David Murray is not positive for the performance of the sector. The ISA is the peak body representing the nearly 50 industry super funds. It blames the overall poor performance on bank-owned retail funds, and argues the not-for-profit industry funds have consistently outperformed retail funds.
The pool of superannuation assets is the fourth largest in the world. The Guardian has this to say:
"The Australian Prudential Regulation Authority’s most recent figures on the rates of return of superannuation funds found that in 13 of the past 15 years industry super funds outperformed retail funds.
Thirteen of the 25 biggest superannuation funds are retail funds, yet only five were in the top 25 performers in 2012-13 and just one was in the top 25 for performance over the past 10 years.
By contrast, industry super funds accounted for just eight of the largest 25, but accounted for nine of the 25 best performing funds over the past 10 years."
Here is the size of Australian super relative to the size of the economy. It is worth remembering that Australia's residential property market is triple the super pool of $1.8 trillion:
Retail funds do not do well:
Over three years, the default funds have performed comparatively well:
But there is little evidence that the "professional" fund managers have been significantly better than the self managed super investors. The real loser is probably the retail funds, and that is just as likely to be due to fee structures as investment philosophy.