POWERED BY MOMENTUM MEDIA
Retail/industry fund performance gap just 0.7%
The investment performance difference between retail and industry funds over the 12 years to June 2016 would be shown to be a mere 0.7 per cent if the Productivity Commission (PC) chose to use a performance methodology net of investment fees and tax, according to ratings house, Chant West.
In a submission filed with the PC this month, Chant West has strongly argued that the methodology used by the PC – aggregate whole of fund data – is flawed.
“As an example, a fund with an older member base will tend to have fewer members and a lower proportion of its assets under management in the more growth-orientated investment options than a fund with a relatively young member base,” the submission said.
“Over the long term, based on whole-of-fund performance data, you would of course expect the fund with the young member base to have a higher return. However, in no way does that reflect how well the funds are managing the individual investment options.”
The Chant West submission then compared its preferred methodology with that used by the PC and said that the performance difference between industry and retail funds from the actual product level data was 0.7 per cent.
It said that by comparing the returns between the methodology used by the PC and that used by Chant West it could be seen that the returns for the not-for-profit segment were reasonably close, with Chant West’s median 0.2 per cent per annum higher.
However, it said the returns based on APRA whole-of-fund data were significantly lower than Chant West’s median for retail funds and the overall industry as a result, partly due to the deduction of higher administration fees and partly due to retail funds including a wider range of options with different investment objectives.
Performance from the Productivity Commission Report based on APRA data (% pa)
Fund category 12 yrs to June 2016
All APRA Funds 5.9%
Not-for-Profit Funds 6.8%
Retail Funds 4.9%
Note: Performance is shown net of investment fees and tax. It is before administration and adviser commission.
Chant West Growth Fund Performance (% pa)
Fund category 12 yrs to June 2016
Overall 6.7%
Not-for-Profit 7.0%
Retail 6.3%
Note: Performance is shown net of investment fees and tax. It is before administration and adviser commission.
Recommended for you
The lower outlook for inflation has set the stage for another two rate cuts over the first half of 2026, according to Westpac.
With private asset valuations emerging as a key concern for both regulators and the broader market, Apollo Global Management has called on the corporate regulator to issue clear principles on valuation practices, including guidance on the disclosures it expects from market participants.
Institutional asset owners are largely rethinking their exposure to the US, with private markets increasingly being viewed as a strategic investment allocation, new research has shown.
Australia’s corporate regulator has been told it must quickly modernise its oversight of private markets, after being caught off guard by the complexity, size, and opacity of the asset class now dominating institutional portfolios.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
92.15 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
53.24 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
43.15 3 y p.a(%)
4
DomaCom Shoreline North Coogee
36.26 3 y p.a(%)
5
GAM LSA Private Shares AU I
35.87 3 y p.a(%)
