No distinction between industry or retail funds

Australian Prudential Regulation Authority deputy chair, Helen Rowell has expressed a preference for dispensing with any distinctions between industry and retail funds.

Under questioning in Senate Estimates about the relative performance of industry and retail funds, Rowell said that if she had a choice, she would not classify them.

“I’d just look at it at an individual fund level and ignore the category altogether,” she said.

Answering questions from Queensland Labor Senator, Chris Ketter, Rowell sought to play down what he described as the “outperformance by the industry fund sector”.

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Discussing relative investment performs, Rowell said it depended on the period being examined.

“I would say, as I have said on many previous occasions, that aggregate sector information on performance is not meaningful, and it is more relevant to look at the distribution of performance across the various funds, in the population, where the picture is quite varied, with a number of industry funds, but also some retail funds performing well over the different periods, and a number of industry funds, retail funds and corporate and public sector funds, for that matter, across all segment,” the APRA deputy chair said.

“At an industry aggregate level, or sector level, there are some differences in asset allocation across the different parts of the industry, but when you get down to individual funds, you get much more dispersion or variation in asset allocations,” she said.

“So, again, particularly when you're looking at choice products there is quite varied asset allocation and of course retail trustees have a much heavier proportion of choice products.”

“When you're looking at the default products, even there, there is variation in asset allocation across the different products, because they set their risk and return targets and their risk appetite, if you like, at different levels, and so that risk appetite would be reflected in different asset allocations and that can play out in different returns.”

“So, it's really important to focus on what is the stated objective in terms of risk and return that the trustee has set, and how is the trustee delivering against that. That is absolutely something we look at on a regular basis and raise any questions we have with the relevant funds,” Rowell said.