Super needs more standardisation of performance measures

The introduction of various methods of measuring superannuation performance means the industry will need more standardisation of performance measures, stronger member education and transparency, according to UniSuper.

Speaking at a FINSIA webinar, Robert Hogg, head of fixed interest and macro research at UniSuper, said super was a more “complex world” driven by four new ways to gauge individual investment options performance.

“We’ve got these various different methods now of measuring performance, whether it’s the heat map, whether it’s the performance test, whether it's the CPI plus objective of the investment option or whether it’s the ‘league tables’ – looking at how one fund compares with another,” Hogg said.

He said the performance test was a “blunt” method that did not allow for any nuance, including the consideration of environmental, social and governance (ESG) investment slants or whether equity components of conservative or pension-like investment options reflected a greater focus on capital preservation.

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“Whereas a number of funds, of course, do quite deliberately arrange the nature of their asset class exposures across the investment risk spectrum so it makes those sorts of conversations also another area of complexity,” Hogg said.

“There are more and more things needing to be explained, which we as an industry have always said, [we need] more and more education, more and more information, more and more standardisation of performance measures, blunt as they can be at times.”