Anthony Klan, Journalist
19 January 2019
Every one of the 50 worst-performing balanced superannuation investments over seven years has been operated by retail funds such as ANZ, Westpac and IOOF, with just one product offered by the for-profit sector making it on to the list of the top 135 performers.
In revelations that categorically bring to an end the fierce three-decade dispute between retail and industry funds over which is superior, secretive and highly detailed industry data obtained by The Weekend Australian shows that regardless of the investment timeframe or level of risk involved, retail funds are unquestionably consistently at the bottom and industry funds are consistently at the top.
Despite every worker being forced to divert a portion of every pay packet into compulsory super since it was introduced in 1992 — and the key choice most people face being whether to invest in an industry fund or a retail fund — no list of worst- performing super investments has ever been made public, with analyst companies refusing to release them.
Retail and industry funds account for more than $1.28 trillion of the nation’s retirement savings and the revelations back renewed calls from federal minister Kelly O’Dwyer this week for the creation of a Future Fund-style national retirement fund to keep the nation’s super savings out of the hands of the “many rent seekers and ticket clippers” in the sector.
The highly detailed data from SuperRatings, considered the most comprehensive and accurate in the nation and used by the Productivity Commission in preparing last week’s report into the $2.8tn sector, lists 278 “balanced” super options offered by the nation’s retail and industry funds.
Over the seven years to March 2018, of all funds in “accumulation” phase, where the member is still working, the 50 worst-performing were all operated by retail funds and all but one of the 17 worst performers were managed by Westpac’s BT or ANZ’s OnePath.
OnePath Managed Growth was the worst-performing balanced option over the seven- year period, delivering an annual average return of 5.17 per cent.
Of the top 135 performers, just one was a retail fund, the Vanguard Growth Index Fund, which came in at 28th place.
Seven years is considered the best timeframe for comparisons because it is the longest period for which reliable data is available, however the results are similar over one, three and five years, and whether “growth”, “cash” or other types of options are examined.
The data looks at balanced options, determined as those with between 60 and 76 per cent of investments in “growth” assets such as shares, and the remainder in defensive assets, such as cash.
Because there is no industry standard, some options in the list may call themselves “growth”, however they are all balanced based on SuperRatings’ criteria.
There are many more industry funds in the list because retail funds were far less likely to disclose their performance.
According to experts, retail funds were likely to report only their best performers, so the actual performance of that sector is likely to be worse than indicated.
The Productivity Commission declined to name any funds in its reports on super, despite saying the Australian Prudential Regulation Authority should improve its “inconsistent” super data to help investors compare.
Retail funds have for many years argued APRA data showing their poor performance can’t be used to judge them because it looks at only the overall performance of “funds”, which usually operate numerous different investment options.
This SuperRatings data specifically examines those individual options, negating that argument.