MySuper is not simply a low-cost solution that promotes passive investments, but caters for a much wider range of investment strategies than commonly thought, according to FuturePlus Financial Services general manager of investments Michael Block.
"Essentially, I think people have misunderstood what [superannuation system review chairman] Jeremy Cooper has said. All Jeremy Cooper has said is, pretty much like me, that fees should be commensurate with the risk and the skill that you receive," Block said.
Critics of MySuper have argued the measure is solely concerned with the costs of superannuation funds and does not take into account the returns generated by investment managers, but Block said that was a distortion of what the proposal implied.
"MySuper never ever said 'you should all go to passive, low-risk, terrible portfolios'. It is only people that want you to pay active management fees that say that it is terrible. The answer to them is: 'Well, I pay you the money when you pay me the return,'" Block said.
He said the proposal left room for a wide range of investment strategies.
"If you were to invest in a portfolio that had lots of alternatives, or lots of high-cost assets, MySuper is totally able to cater with a high-cost portfolio," he said.
"All Jeremy Cooper has roughly said is that if de facto you are getting a low-risk portfolio, because your asset allocation is poor, then a low-cost, low-risk solution might be a better one for you, and I totally applaud that."
He said he expected the introduction of MySuper would increase the costs for superannuation funds in the short term.
"To the extend that it is aimed at reducing costs, there will be some short-term costs before the long-term benefits of the MySuper regime are found," he said.
"Maybe you need to change your product, maybe you need to change your PDS (product disclosure statement), maybe you need to rethink the investment strategy and the managers and the transition. MySuper will create administration and implementation costs for all funds."
