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Dud super funds give themselves tick of approval

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“Disappointingly, every fund gave themselves a pass mark and half deemed themselves so perfect they didn’t need to improve in any area at all,” said SCA director Xavier O’Halloran.

All 42 funds claimed to have promoted their members’ best interests over the past financial year, even though 17 of the funds in the sample are likely to be singled out by APRA on Tuesday as underperformers, based on publicly available data from the prudential regulator.

SCA found that poor-performing funds constructed their own performance metrics, ignored longer-term results, and used a “lack of context and transparency to downplay their underperformance”.

AMG Super gives its underperformance the green light. AMG Super

One of the most egregious examples of obfuscation, the research found, was AMG Super. The retail fund published a graphic in its MOA claiming its default MySuper product had outperformed its investment target and “other similar products”, despite the same document showing it had failed to achieve its five-year return target. The fund made no reference to what the other products were.

Christian Super created its own “unreplicable” metric that showed the fund was in the top 50 per cent of super funds for fees and investment performance, though publicly available data from APRA show it is one of the most expensive funds.

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Maritime Super, which on Monday outed itself as an underperformer, included a table describing its performance in periods over horizons longer than one year as “not applicable”, since it changed its investment strategy in December 2019.

Maritime Super is not interested in dwelling on the past. Maritime Super

EISS Super’s MOA highlighted its performance in the six-month window to December 31, 2020, when a rebound in global equity markets saw super funds post record investment returns.

”This is outside the reporting period of the 2019/20 financial year relevant to this MOA. It is also a completely inappropriate time frame for assessing the relative performance of a long-term investment like superannuation,” the report said.

Eight of the 17 potential underperformers in SCA’s sample did not identify any shortcomings in their performance or commit to improve. This included default products from BT, Commonwealth Bank, Active Super and VISSF.

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SCA also observed that the MOAs were “overwhelmingly hard to find” on funds’ websites, and very few funds examined how they were working in the best interests of different cohorts of members.

Mr O’Halloran said the prudential regulator should require funds to use a standardised approach when comparing their performance.

“Going forward, we think it is appropriate that APRA forces funds to use independent metrics. The current round of self-reporting would have led people in the worst-performing funds to believe their fund was a gold medallist,” he said.

“The proof will be in the pudding on Tuesday, when a large group of funds that were patting themselves on the back will be found to have failed the performance test.”