The strongest determinant of performance for superannuation fund members is not simply scale, but the commercial model and profit orientation, according to Industry Super Australia (ISA).
ISA has used a submission to the Productivity Commission (PC) to once again stress its belief that industry funds outperform their retail counterparts.
Pointing to previous questions posed by the PC, the ISA noted that it had asked whether the greatest risk a member faced in superannuation was being defaulted into a poor-performing product.
It claimed this was not true, and that the statistical evidence showed “that the greatest risk to a member is being sold into a choice product”.
“The degree of risk is a function of the probability of a harm (in this case, low net returns), and the magnitude of that harm (in this case, the degree to which the returns are low),” the ISA submission said.
While acknowledging that some default funds fell into the bottom quartile in terms of net returns, the ISA submission argued that more than two-thirds had achieved returns in the top quartile.
“This means that, probabilistically, there is greater than a two-in-three chance that an account that was established through the default system will have received top quartile long-term net returns,” the submission said.
BlackRock boss Larry Fink praised Australia’s superannuation system in his annual chairman’s letter.
The prudential regulator has announced it will publish new expenditure data of superannuation funds, providing details on expenses like advice, director remuneration, and payments to unions.
Affirming the UK’s growing attractiveness as an investment destination, a number of Australia’s largest investors recently joined the UK Foreign Secretary for an exclusive briefing in Canberra to discuss further opportunities for trade and growth.
The specialist superannuation law advisory practice is set to wind up, with managing partner Jonathan Steffanoni planning to bring a new offering to market.
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