The Stockspot Fat Cat Funds Report, which aims to call attention to consistently underperforming Australian superannuation and managed funds, dubs the worst-offending group as ‘Fat Cat Funds’.
The report defines a ‘Fat Cat Fund’ as a superannuation fund that has consistently underperformed its peers over one, three and five years, with returns that have underperformed by 10 per cent or more over the five-year analysis period.
Among the 4,102 funds analysed, it was found that the number of ‘Fat Cat Funds’, the amount of money managed and percentage of fees charged had all fallen since last year, which Stockspot founder Chris Brycki described as “good news”.
“This [is] due partly to attrition (funds closing), partly luck (funds don’t qualify as Fat Cats if they just have one good year of performance), and partly due to some funds reducing their fees,” Mr Brycki wrote in the report.
“The unfortunate news is that 521 Fat Cat Funds still exist and $45.6 billion is trapped inside them.”
For many of these funds, he said, it was not the first time they had appeared on the list.
“Little is being done to reduce fees or move members into better options,” Mr Brycki said.
“These funds rely on consumers' lack of awareness, and for the most part they have avoided scrutiny.”
Conversely, the report revealed that the amount of returns lost to fees in ‘Fit Cat Funds’ (those that outperformed peers over a one-, three- and five-year period and by 10 per cent over five years) was three times less (8 per cent) when compared with that of ‘Fat Cat Funds’ (24 per cent).
The ‘top’ three ‘Fat Cat Funds’ were also identified in the report, with ANZ (OnePath) taking out first place for the fourth year in a row with 218 Fat Cat Funds and $114,822,853.58 charged in fees.
AMP/AXA ‘won’ second place with 87 Fat Cat Funds, followed by CommBank (Colonial First State) with 47.
On the other hand, the number of 'Fit Cat Funds' has risen since the last year, signalling the industry was paying attention, Mr Brycki said.
“The regulators are also listening. In response to concerns about the under-reporting of fees, ASIC has taken steps to increase transparency for consumers with new reporting standards for the super fund industry,” he wrote in the report.
“By late 2018, funds will need to report all of the fees being paid including costs that have been hidden in the past.
“Early indications suggest that the published fees of some funds will more than double as a result of this new disclosure regime.”
Platinum Asset Management was awarded first place in the ‘Fit Cat Awards’, with Legg Mason Asset Management and Ausbil Investment Management coming in second and third place respectively.
Top performing ‘Fit Cat Funds’ saw Folkestone Maxim Asset Management, Forager Funds Management, Firstmac, Supervised Investments Australia and Equity Trustees ranking in the top five.
Pimco adds White House COS to advisory board
NAB corporate super GM jumps ship to AMP
Bravura executive returns to Mercer
Five bond myths for 2018
In-house product: Hayne's next target?
Applying a VC mindset to corporate ventures