Underperformance not adequately punished
The Australian superannuation fund market has not sufficiently punished underperforming funds, according to new research commissioned by the Australian Institute of Superannuation Trustees.
The research, undertaken by the Faculty of Economics and Research at the University of Sydney, has pointed to the outperformance of industry funds compared to their retail counterparts.
It said there had been an expectation by policymakers that at some point in time competition would lead to better performing funds being rewarded, but this was not necessarily occurring.
"It would also be heroic to think that such a competitive market is a realistic prospect in the foreseeable future," the research analysis said.
It said this was because the superannuation fund market did not work to equalise returns and this meant sustained differences in performance could continue.
The research suggested that conflicts of interest between fund members and fund managers were structured in different governance models.
However, the principal of research house Chant West, Warren Chant, said the difference in performance between funds was not just about governance but also asset allocation.
He said the exposure of retail funds to listed equities had been a key differentiator in returns.
Chant said the value of liquidity delivered by exposure to listed investments could also not be underestimated.
AUTHOR
Mike Taylor
Recommended for you
Insignia Financial has returned to profit in FY25, after a $185m loss in the previous year, while its advice division grew their revenue per adviser by 14 per cent.
With licensee switching on the rise, particularly for newer advisers, compliance expert Sean Graham has shared red flags to watch out for when making the jump between AFSLs.
Beyond their investment benefits, over a third of advisers say utilising managed accounts solutions has allowed them to take on more clients, according to Praemium.
Insignia Financial’s wrap platform has appointed Heidi Press, former HUB24 head of product management, to spearhead the design and delivery of the MLC Expand platform.
