No frills from passive Virgin
Customers of Virgin Superannuation will only have to pay a flat fee of 1 per cent a year, but their money will not be actively managed.
Instead, flamboyant British billionaire Richard Branson’s play into Australia’s heavily congested superannuation market will use index tracking funds from Macquarie Funds Management. Customers will be given two investment options, one which automatically adjusts asset allocation with life stage, and another which lets customers take care of the asset allocation themselves.
According to Virgin, over 10,000 customers have already pre-signed up to the product in advance of choice arriving on July 1.
Virgin Money, also responsible for the Virgin credit card, is confident the cheap and simple approach will attract more mainstream Australian investors.
“Many Australians are sick of paying outrageously high fees to fund managers who gamble with their hard earned cash with no guarantee of great performance,” said Virgin Money managing director Rohan Gamble.
In an attempt to back up its claims of offering good value, Virgin Money has quoted a recent Rice Walker Actuaries report which shows its fee of 1 per cent is lower than the 1.17 per cent average fee of industry funds.
Industry funds currently employ a range of investment strategies including both active and passive investment management.
Virgin Money has also commissioned research by Morningstar that showed only 36 per cent of active Australian equity managers outperformed their comparable index over the last five years.
“Picking a consistent winner is like entering the lottery for the average Australian,” said Gamble.
Meanwhile, Virgin Money has released the results of a commissioned AC Nielsen survey of 1,100 people discovering that Australians find superannuation more important than their weight, taking a regular holiday, owning a car, their favourite sports team, watching their favourite TV program or keeping up with fashion.
“Our survey strongly suggests that super was never quite as dull to the average Australian as we have been led to believe,” said Gamble.
Recommended for you
Global equity manager Orbis Investments has appointed a head of marketing from Capital Group as it becomes the latest manager to target advised retail investors.
Shaw and Partners’ new national head of private wealth believes the biggest challenge for financial advisers right now is being able to deliver efficient advice delivery amid a complex regulatory environment and growing investment universe.
While Australia prepares for the $3.5 trillion intergenerational wealth transfer, a Wilsons Advisory report suggests the ongoing gender imbalance in the advice profession could prove a challenge to this process.
Danielle Press, a former ASIC commissioner, is to chair a new AFSL committee set up by Sequoia which seeks to improve governance practices and review its approved product lists.
