A recent analysis by the Australian Prudential Regulation Authority (Apra) reveals that billions of dollars are invested in underperforming superannuation funds in Australia πŸŒπŸ’°. The study shows that one-in-five investment options are generating returns significantly below their benchmarks. Major financial institutions such as Commonwealth Bank-backed Colonial First State, OnePath, BT Funds Management, and Equity Trustees are among those overseeing these subpar investments.

Apra’s heatmap details the performance of individual “choice” funds, which represent $995bn of members’ money out of the $2tn regulated by Apra πŸ“Š. These funds are products that workers can choose to join, regardless of their workplace, and do not include default MySuper funds offered by employers.

Apra’s deputy chair, Margaret Cole, states that although there has been some improvement in the performance of choice accumulation products, there are still too many products delivering sub-standard investment returns to fund members πŸ“‰πŸš©. The regulator’s list also highlights investment options with significant administration fees, with Equity Trustees being one of the names cited.

Newer funds, such as Spaceship Super and Student Super, are also included in the list of high-fee products πŸš€πŸŽ“πŸ’Έ. The analysis shows that investment options with high fees tend to have lower levels of member benefits. Apra’s data covers 163 products, representing $292bn worth of members’ money. About 44% of investment options with an eight-year performance history were generating returns below expectations.

The analysis also indicates that products closed to new members are more likely to underperform and have higher fees πŸš«πŸ’Ό. Fund managers often close products to new members due to low demand or poor performance. Apra found administration fees for that cohort to be particularly high, with average annual fees for account balances of $50,000 in closed choice products being $225, compared to $149 for open products.

Margaret Cole encourages all superannuation members to check whether they are satisfied with the outcomes they are getting from their chosen investment strategies πŸ§πŸ”. Trustees overseeing investment decisions will be scrutinized, and those with underperforming products or unjustifiably high fees will need to explain their actions.

In conclusion, it’s crucial for Australians to be aware of their superannuation fund’s performance and fees to ensure they are making the best choices for their financial future πŸŒŸπŸ’ΌπŸ‡¦πŸ‡Ί.
#Superannuation #Australia #FinancialPlanning #Investment
Source: https://www.theguardian.com/australia-news/2023/apr/28/one-in-five-super-funds-is-performing-poorly-find-out-if-yours-is-among-them

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