POWERED BY MOMENTUM MEDIA
Big super funds should not escape regulatory scrutiny
Small and medium-sized superannuation funds can and do serve their members and generate competitive returns and the debate around industry consolidation based on size needs to be move on, according to participants in a Super Review roundtable.
The roundtable, sponsored by Bravura Solutions, saw key superannuation fund chief executives agree that a singular focus on smaller funds and whether they had a viable future represented a distraction from larger issues.
The chief executive of mid-sized fund, legalsuper, Andrew Proebstl led the way in defending the relevance and viability of smaller funds, arguing that regulators such as the Australian Prudential Regulation Authority (APRA) should not ignore the situation with some of the larger funds.
“The obsession with smaller funds and whether they’ve got a viable future is an interesting one and all the energy and time being spent on that means the industry is not focused on the bigger end of town where there are more members and more risk when things can go wrong,” he said.
“They should be looking at what big funds are up to as well,” he said. “Internalisation of investment management has all sorts of risks associated with it.”
Proebstl said the governance of industry funds in the past was not related to the governance of what amounted to being a fund manager and the transition from one to the other needed to be managed very, very carefully.
EISS Super chief executive, Alex Hutchison said he believed choice and competition represented the essence of the argument.
“You can’t argue for competition at one end of the spectrum and not at the other,” he said.
Hutchison said that if superannuation funds, no matter what their size, could not deliver service and returns to their members then they should not be there.
Deloitte superannuation partner, Russell Mason said he believed the debate and preoccupation around the size of a fund in terms of its efficiency was not well-founded.
“Great member outcomes can be achieved by large funds or smaller funds,” he said. “Smaller funds use outsourced service providers so they get economies of scale.”
“Unlike other industries, in superannuation the way the outsource model works a smaller player can survive very successfully. We need to move on from this debate,” Mason said.
Recommended for you
A major super fund has defended its use of private markets in a submission to ASIC, asserting that appropriate governance and information-sharing practices are present in both public and private markets.
A member body representing some prominent wealth managers is concerned super funds’ dominance is sidelining small companies in capital markets.
Earlier this month, several Australian superannuation funds fell victim to credential stuffing attacks, which saw a small number of members lose more than $500,000.
Small- to medium-sized funds have become collateral damage in an "imperfect" model for super industry levies, a financial institution has said.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
93.34 3 y p.a(%)
2
Global X GlobalX FANG+ ETF
37.15 3 y p.a(%)
3
GAM LSA Private Shares AU I
33.96 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
29.68 3 y p.a(%)
5
Plato Global Alpha A
28.73 3 y p.a(%)
