Superannuation fund members are spending almost $35 billion on fees every year according to a new report, which has also named AMP, OnePath and Macquarie as holding the worst-performing funds.
The 2020 Fat Cat Funds report from Stockspot has stated poor fund performance is largely due to high fees, with chief executive Chris Brycki warning consumers they will be around $200,000 better off in retirement if they are in a fund charging less than 1 per cent rather than another costing 2 per cent.
In this year’s report, UniSuper, IOOF and AustralianSuper were assessed as holding the most top-performing funds after fees, compared to other super options of similar risk over five years. UniSuper came in first with seven “fit cat” funds, that ranked among the top 10 options with similar risk.
Meanwhile AMP bottomed the charts, with 12 “fat cat” funds, or options that listed among the 10 lowest-performing super funds within a particular risk group for a five-year period. OnePath followed with 11 fat cat funds while Macquarie had five.
The average top-performing fund charged 1.1 per cent fees in its growth option, in contrast to the fat cat average of 2.08 per cent. In the balanced options, the average fit cat fund fee was 0.85 per cent, in contrast to the fat cat average of 2.04 per cent.
According to Stockspot, lower fee growth funds (under 1 per cent per annum) gave an average five-year return of 6.42 per cent, 0.81 per cent more than their higher fee counterparts charging more than 1 per cent per annum.
In the balanced options, lower fees give rise to an average return of 5.68 per cent, 0.96 per cent more than the higher fee average.
Looking at funds across categories, Prime Super’s alternatives option topped aggressive growth super funds (at least 80 per cent growth assets), with an average 9 per cent per annum five-year return while AMP Capital’s Premium Growth came in last with its 0.6 per cent return.
HESTA beat out the other growth super funds (60-80 per cent growth assets) with its 8.6 per cent return while AMP Capital’s multi-asset fund was last with its 1.2 per cent return.
WA Local Government’s sustainable future option came in first for balanced super funds (40-60 per cent growth assets), with its 6.9 per cent per annum five-year return. AMP Capital’s Dynamic Markets fund sat at the bottom of the list, with -2.2 per cent.
In moderate super funds (20-40 per cent growth assets), Macquarie Life Capital Stable topped, with 5.8 per cent, while AMP’s Schroder Real Return fund came in last with 1.7 per cent.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].