Australia’s industry superannuation market has overshadowed its retail fund rivals in a comparative test of fees, asset allocation and investment expenses, according to new data from The Australian Prudential Regulation Authority (APRA).
APRA released the research results late yesterday, on the performance of large APRA-regulated superannuation funds from July 1, 2001 to 30 June 30, 2006.
The research found there are few statistically significant differences in returns between corporate, public sector and industry funds (not-for-profit funds). However, the study found that the main difference in net returns between fund types is due to expenses.
Retail fund expenses, explicit and embedded, lowered the net earnings of the retail sector, relative to the not-for-profit sector.
“I think what needs to be said about the outcomes is these are averages… consumers and advisers need to look at individual performance… in order to make valid conclusions,” Investment and Financial Services Association (IFSA) chief executive Richard Gilbert said..
In relation to investment management performance, while there is market similarity, retail funds have, on average, come out more expensive overall because of advice, he said.
“Consumers need to be on the ball to get this advice and that is critical. I am sure that consumers who have had advice about moving their assets in the last six months… will be very happy to pay for it,” Gilbert said.
The study examined a representative sample of 90 corporate, industry, public sector and retail superannuation funds, each with more than $200 million in assets as at June 30, 2005.
The research was commissioned by the Council of Financial Regulators and is published on the APRA website.
