Does size matter for MySuper options?

8 March 2019

For all the fuss regulators and commissions have been making about scale in the super industry, new data has shown that members in some of the top funds’ MySuper options saw limited differences in returns regardless of the provider’s size.

Data from FE Analytics showed that AustralianSuper’s MySuper option, one of the biggest in the industry, returned 24.48 per cent in the three years to 2018’s end. Smaller funds delivered similar results, however. BUSSQ Building Super’s Balanced Growth MySuper option, for example, returned 20.62 per cent for the same time period.

Mid-size funds were also in the same ballpark. As the chart below shows, a selection of the top mid-size funds, as determined by the Super Fund Crown Ratings, all showed negligible variations in returns for their MySuper options, ranging from 21.1 – 24.28 per cent over the three years to 31 December, 2018.

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This analysis comes in the wake of both the Productivity Commission and the Australian Prudential Regulation Authority (APRA) last year putting renewed emphasis on the importance of scale for funds, and the Commissioner Kenneth Hayne flagging mergers and fund size in the Banking Royal Commission final report.

Larger funds too had put emphasis on scale as a selling factor, but drilling down into the data suggests that, when fees remain comparable as they do between the industry fund options above, this may be less of a differentiator for consumers that they suggest.

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Wow looks like that Asset allocation of "Defensive assets" sorry I mean Growth assets cough cough property and infrastructure look to be the only difference funny that these are both call "Balanced Funds" but should be called either balanced growth for sunsuper and just growth for Australian super... If I hear the word balance I think 50/50 and should be classed accordingly 50% growth and 50% defensive

Australian Super
Growth 90%
Defensive 20%

Growth 70%
Defensive 30%

No, size doesn't matter. There is no direct correlation between fund size and returns. APRA is quite simply acting against the best interests of Members by trying to force small funds with excellent returns to amalgamate or merge.

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