High fees don’t always equate to low returns
Superannuation funds ratings house, SuperRatings has disagreed with a draft finding by the Productivity Commission (PC) that higher fees are clearly associated with lower net returns over the long term.
In a submission responding to the PC, SuperRatings said it did not ascribe to the view about higher fees and lower returns, and pointed out that superannuation products levied a variety of fees and charges, “some of which may ultimately add to retirement balances”.
“For a number of providers with a high investment fee, it can be attributed to allocations to higher cost asset classes, which have been a key reason for their consistently strong performance outcomes for members,” it said. “Accordingly, we believe that any analysis of this issue should be focused on the types of fees being incurred by consumers, in particular uncompetitive administration or product charges.”
The SuperRatings submission said that in many instances, these administration or product charges were not expected to add to net investment outcomes but, rather, represented a structural drag on retirement balances.
It said that while SuperRatings agreed with the assertion that members were often better off in lower-fee, better-performing funds, it believed there were clear examples of providers with above median fees, that had strong overall outcomes.
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