Industry super funds outperform bank-owned funds

Australian industry superannuation funds have outperformed bank-owned funds on average by two per cent in the short, medium and long term, Industry Super Australia (ISA) says.

This outperformance was driven mainly by two factors: culture, which delivered all profits to members, and investment philosophy.

The average outperformance of industry super funds over bank-owned ones ranged from 2.63 per cent over one year up to 2.25 per cent over 10 years.

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Also, the retail and bank-owned super funds were facing additional fees of between $800 million and $1.8 billion over four years, which would leave members around $20,000 worse off in retirement, according to Rainmaker Research.

ISA's chief executive, David Whiteley, said that the recent announcement by the consortium of IFM investors and Australia's largest super fund, AustralianSuper, of its successful bid for the lease of NSW AusGrid was representative of the long-term investment beliefs of industry super funds.

"Industry super funds are deliberately different to banks," he said.

"While the banks chase profit at members' expense, industry super funds are focused on getting the best super returns for Australians by making deep, long-term investments, especially in infrastructure, which in turn strengthen the foundations of Australia's economy.

"The difference continues to be quantified by the outperformance of industry super funds."

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Mmmmm....better get onto super ratings ASAP, the lowest fees in the market are now retail funds. Bendigo and ANZ Smart Super are cheaper than ALL the industry funds. Looking at the 5 year returns for the high growth portfolios also shoot a lot of holes in this article and the assumptions, what do we have here, oh well blow me down with a feather, BT Super for life outperfoming its closest ISN competitor by over 1.20% per annum. Yes we can all use stats to make our cases cant we ????? Over to you David.

I'm a fan of your commentary TJ, but I can categorically tell you that ANZ Smart choice super and Bendigo are not cheaper than ALL (or most) industry funds (or profit for member funds). Comparing performance returns, the ANZ smart choice div fund returns are also lower.
I dont agree with the ISN or Whiteley, but I'm sorry TJ your assertions are wrong. If I knew who you were, I'd give you a call to chat.

Northy I got that from the top 10 in fees from super ratings, so its just what they compare so point taken if there are others that aren't compared there that I missed. Just trying to point out that there are very low cost retail funds out there too, and also well performing ones, its not the domain of one part of the industry to have low fees. Thanks for the comments as well I go off a bit on here sometimes half cocked, but then again it means I don't kick the cat when I get home every night so to speak. Cheers.

"This outperformance was driven mainly by two factors: culture, which delivered all profits to members, and investment philosophy." No, the "outperformance", is because industry super funds have proportionately larger investments in direct infrastructure and/or unlisted companies -- the "other" asset class. These "other" assets are not exposed to the blowtorch of market valuations. There is no mark-to-market valuation as there is no market. As we all know, one generally gets the valuation they pay for -- Independent Experts' reports are a classic example -- and this directly impacts reported performance.

Looks to me like the Ausgrid purchase strengthens the bonuses of all the executives required to turn around this heavily unionized infrastructure dinosaur. Australian Super has inflows of $500M per month...must be tough finding a home for it all. Some of the Ausgrid workers might find their own low cost profit to members super fund laying them off.

How did Super funds go against the equivalent accumulated index ETF's?

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