The quarterly investment return for retail funds stands at 5.2 per cent compared to 4.7 per cent from industry funds, according to research house Wealth Data.
Looking into the latest super data fund for the March quarter released by APRA this week, Wealth Data founder, Colin Williams, explained retail funds have achieve two consecutive quarters of “out performance” returns.
“This out performance is narrowing the five-year return gap with industry funds. The gap, which was 1.7 per cent in Q4 2021 has reduced to less than 1 per cent, with retail funds now yielding 5.9 per cent compared to industry funds’ 6.8 per cent,” Williams said.
However, industry funds continue to maintain dominance and expand, he said.
“Industry funds retain their dominant market share, largely attributed to absorbing public funds and stronger net flows compared to other fund types,” he elaborated.
“Retail funds have shown marginal improvement, increasing from a low of 20 per cent in Q3 2023 to 20.3 per cent in the recent quarter.”
In terms of flows over the last 12 months, industry funds grew by $60 billion to reach $1.3 trillion. Meanwhile, retail funds expanded by $37 billion to reach $746 billion.
Industry funds also maintained an advantage in terms of lower fees.
“The gap on a rolling 12-month basis has remained stable in recent years, with industry funds hovering around 0.49 per cent and retail funds at 0.70 per cent,” Williams noted.
Interestingly, industry funds’ dominance was hampered, in part, by a steady increase in transfers to self-managed super funds (SMSFs), he pointed out.
“After a period of restricted transfers out to SMSFs by APRA-based funds, the recent data reveals a steady increase in transfers to SMSFs. The flow out to SMSFs has essentially doubled since Q1 2022, driven largely by increased losses at industry funds,” he said.
Particularly, SMSFs grew to 614,400 in the last quarter, compared to 596,370 in the first quarter of 2023. Total net assets of SMSFs, too, hit a new record of $896 billion, up from $823.2 billion in the prior corresponding period.
Earlier this week, KPMG’s annual Super Insights report noted that Australia’s seven mega funds – AustralianSuper, Australian Retirement Trust, Insignia, Aware Super, UniSuper, AMP and CFS – each hold over $100 billion in funds under management and nearly 60 per cent of total super assets.
The superannuation sector grew 7.6 per cent in 2023, it said, and recent figures suggest total assets stand at some $3.9 trillion.
