AMP accuses ISA of misusing APRA fund data

AMP Limited has taken Industry Super Australia (ISA) to task for misconstruing superannuation fund performance data in submissions to the Productivity Commission (PC).

AMP has used its own submission to the PC to argue that the ISA’s use of Australian Prudential Regulation Authority (APRA) data on 10-year returns led to inaccurate comparisons because they did not take account of the significant investment options, risk profiles and other variable investment option metrics.

The AMP submission said that despite APRA having recommended that users of the statistics use caution in their analysis and interpretation, “we are concerned that data on the APRA website is already being used incorrectly by others in the industry for super fund comparisons”.

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“Conclusions drawn from incorrect analysis can have critically important negative consequences – flawed analysis and recommendations,” it said.

The AMP submission said that accurately comparing the 10-year return of the AMP Superannuation Savings Trust to the 10-year return of another superannuation fund with different investment options, risk profiles and other variable investment option metrics was “impossible and therefore meaningless”.

However it said the ISA had sought to do this.

“As we have previously stated in this submission, we believe it is inaccurate to make comparisons of 10-year returns from the APRA Annual Fund-Level Superannuation Statistics on the APRA website, when the actual default MySuper investments options have only been in operation for the last four years.

“It is not possible at this point in time to conduct any long-term net return analysis of MySuper default investment options,” the AMP submission said.

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Investment performance adverts and comparisons should be banned - point in time return reporting is misleading. If they were banned it would force consumers to engage with the fund to understand performance of their particular fund, or through an adviser. The fear is that people are making ill informed decisions off the back of dodgy advertising practice, driven by amoral super fund providers - and they are all guilty.

ISA = Snake Oil Salesman

Seems to be a repeating blame-game from retail product manufacturers whose product's seldom remain the same for anything but a few years before being morphed and phoenixed, of course always in the name of 'innovation' and 'development', but curiously often when their performance has been ordinary.

This type of comment is exactly what AMP are talking about. You can't compare "retail" funds because most of them are just administration platforms offering access to a range of wholesale managed funds or direct shares. The performance is down to the underlying portfolio that has been selected, it's nothing to do with whether you've gone through Colonial FirstChoice or BT Wrap to access those managed funds. There's so much misinformation out there but no one has the guts to argue the point with ISA in the media and get our message out there.

Still the performance figures of the ISFs are there and cannot be argued against !

That's only because they can pick and choose when they revalue their portfolio of unlisted infrastructure holdings.

Just do the same thing. Create a 90% growth fund, use security lending to further boost returns, call it a Balanced fund because it has something in it. and compare the results. Trust in the statutory compensation scheme to cover you if it comes unstuck. Come on AMP. Get with the times.

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