Before the Global Financial Crisis (GFC) hit in October 2008, around a third of Australian super funds delivered returns averaging at least 9% per annum over the five-year period from 2004 to 2008, while 10% of super funds were delivering double-digit returns over this same period, according to performance data released by the superannuation industry regulator.
Despite vocal opposition from some sections of the superannuation industry, the Australian Prudential Regulation Authority (APRA) has released performance data for 200 individual superannuation funds, covering the five-year period from 30 June 2004 to 30 June 2008. Performance figures are also presented as annualised three-year rates of return, as well as rates of return for each of the five years (2004 to 2008).
The data covers the 200 largest super funds in Australia which represents 98% of the assets of all super funds regulated by APRA, and 95% of all fund members. Although not included in the data, APRA-regulated super funds include small APRA funds (four members or less), exempt public sector superannuation schemes and pooled superannuation trusts. Note that self-managed super funds, which hold 30% of all super assets and are regulated by the ATO, are not included in the APRA report.
We will analyse the APRA performance data in more detail in the September edition of the SuperGuide newsletter, but according to analysis conducted by research house Rainmaker Information and published in the Financial Standard, the top returning super fund type is the public sector super fund returning 9.8% each year over a five-year period. Industry funds returned 9.3% while corporate funds returned 8.5%. Retail funds lagged far behind with an average return of 6.6%.
Industry association, the Association of Superannuation Funds of Australia (ASFA) warns consumers that the APRA performance data will be of limited assistance when checking the relative performance of superannuation funds.
ASFA CEO, Pauline Vamos, holds the view that the super funds at the top of the APRA returns list have relatively few investment options and most money is invested in the default option. Accordingly, ASFA accepts that the APRA return figure for these funds is in line with the return of their default, balanced fund, investment option. In contrast, ASFA asserts that with the more complex funds with multiple products and investment options – such as retail funds – the APRA return is a return for the total of all the different investment options every member has chosen. Due to this composite return, ASFA states that it is no surprise that retail funds appear towards the middle or lower part of the list.
ASFA, along with the private fund rating agencies, consider that the rating agencies provide more detailed and more current investment performance information to the media and the public than the APRA performance data.
The following are the two major complaints directed towards the APRA performance data:
- returns quoted in the APRA report are for the total assets of a super fund, rather than for the different investment options within the fund
- reported returns in APRA report only represent investment performance up to 30 June 2008, which means the effects of the global financial crisis are not represented in the data.
According to APRA, the performance data come from annual audited returns submitted by the funds’ trustees. APRA does not currently collect investment option data from super funds, although the regulator is investigating broadening its collection of statistics from super funds.
You can access the APRA performance report listing the returns for Australia’s largest 200 super funds by clicking here.
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[...] fund assets rather than returns for the different investment options within the super fund (see Exposing the performance history of Australia’s largest 200 super funds), the assertion from many in the industry is that this fund level data is consequently misleading [...]