POWERED BY MOMENTUM MEDIA
APRA research hits retail funds
Research carried out within the Australian Prudential Regulation Authority (APRA) on outsourcing in the superannuation industry has again delivered a strong endorsement of the model pursued by not-for-profit funds at the expense of retail master trusts.
The research, undertaken by Kevin Liu and Bruce Arnold, was made public by APRA this week and concludes that while using related parties to provide particular services is not, of itself, detrimental to fund members, “the trustees of retail funds pay significantly higher fees to related service providers”.
It said that, in contrast, the fees paid by trustees of not for profit funds to related parties were not significantly more than those to independent service providers.
The Liu and Arnold research then went further and said that the largest difference between not for profits and retail funds occurred with respect to administrative services where they had found “strikingly different fee models used in different contexts”. They said that for independent administrators and not for profit related party administrators, the fees were predominantly related to the number of members in a fund whereas, by contrast, retail fund related party administrators paid a large fixed fee plus a variable component based on assets under management.
“These different approaches result in the median fund paying $12.2 million in fees under the retail-related administrator versus only $2.3 million to a service provider who was independent or not for profit related,” it said.
The researchers suggested that the approach adopted by not-for-profit funds was designed to minimise the cost of delivering superannuation to the fund’s members, while the outsourcing by retail funds “does not appear to be intended to reduce members’ costs, but instead may constitute part of the revenue model for the retail superannuation product”.
AUTHOR
Mike Taylor
Recommended for you
“Slow and steady” appears to be the Reserve Bank’s approach to monetary policy as the board continues to hold on to its wait-and-see method.
AFCA’s latest data has shown a decline in complaints relating to superannuation, but there is further work to be done, it has warned super funds.
Limited exposure to fossil fuel companies has positively impacted the performance of Australian Ethical’s balanced and growth funds, the super fund says.
The major bank has announced that real-time super payments will soon be available to all QuickSuper employers ahead of the looming payday super regime.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom 465 Calder Road Calder
99.46 3 y p.a(%)
2
DomaCom DFS Mortgage
95.46 3 y p.a(%)
3
Global X 21Shares Bitcoin ETF
78.55 3 y p.a(%)
4
BetaShares Crypto Innovators ETF
50.39 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
47.50 3 y p.a(%)
