It was a rare moment of bipartisan unity when Tim Wilson and Andrew Leigh came together to call out ethical fund Future Super’s doublespeak as it attempted to explain how passive investments are actually active investments and what being a “promoter” of the fund really meant.
“We’ve heard about the particular marketing fees that are being charged by promoters that are selling a pretty similar product…I see very little difference in the actual investment strategies of these funds. It looks to me that promoters are just dragging in different subsets of the market to then invest them in exactly the same product,” Mr Leigh said.
While it recently lowered fees on all investment options, Future Super was previously considered pretty pricey. The argument goes that you get what you pay for, and in this case you were paying for superannuation that didn’t invest in the hidden nasties (Cleanaway notwithstanding) that their bigger brethren did. While its performance was ahead of some peers, so were a lot of ETFs that don’t have exposure to oil and gas – and if you missed it, that’s basically what the fund is.
Nearly 70 per cent of member’s money is allocated to two BetaShare ETFs. The fund apparently has 12 full-time employees to double-check that companies included in the ETFs are true to label, but it’s a world away from the true active management and engagement that most people understand as being the key to creating a more sustainable future.
While it might not technically be misleading investors, it seems that slapping progressive labels on a product that isn’t much different from those already available is enough to drive enormous growth. Future Super’s FUM soared from $450 million in 2019 to $1 billion in 2020.
We’re living in an ESG gold rush. As with any gold rush, there will be plenty of shady operators looking to take advantage of that by marketing their products as green, clean, and capable of changing the world. Future Super is hardly greenwashing. But with the world standing on the cusp of a multitrillion-dollar generational wealth transfer, there will be other operators out there looking to make a quick buck. Future Super – with its vibrant, quirky ad campaigns and take-on-the-world attitude – provides a perfect template to follow.
