Betashares to enter superannuation sector

Marking its entry into the industry, Betashares is set to acquire Bendigo and Adelaide Bank's superannuation business, in a move labelled great news for consumers.

The ETF provider will buy Bendigo Superannuation, taking on its $1.4 billion in funds under administration and more than 19,000 members. The terms of the deal were not disclosed.

It's been described as a transformational step for Betashares, expanding its business beyond ETFs and into the broader financial services sector.

Bendigo and Adelaide Bank undertook a sales process for the super business, in which it was determined that Betashares had the "investment scale, expertise and commitment to customer service that will best serve its fund members into the future."

"Betashares was selected following a process that took into consideration several factors, including alignment with our own strong customer focus and the ability to enhance member outcomes," says Bendigo and Adelaide Bank chief customer officer of consumer banking, Richard Fennell.

"As part of this process, the bank has prioritised a smooth transition to a new provider."

As such, the bank says it expects several employees to transfer to Betashares.

Meantime, Betashares chief executive Alex Vynokur says the move into superannuation is part of a carefully considered long-term plan to "play a greater role in helping Australians meet their wealth creation goals".

"Over the course of the past 12 years, Betashares has developed a market-leading position in the Australian ETF industry, helping democratise investing by expanding choice, lowering costs and improving investor education and engagement," Vynokur says.

"We are privileged to serve over one million Australian investors and their financial advisers today. Over the course of the next decade, we have a vision for the firm to continue developing into a leading, independent Australian financial services business."

Rainmaker Information executive director, research Alex Dunnin says the move by Betashares is great news for consumers.

"BetaShares' ETF-based investment strategies will provide Australia's super fund consumers with more opportunities to join efficiently managed, low-fee superannuation products that, through their index-based investments, have proven to deliver strong returns," he says.

Rainmaker research shows that while super fees are trending down, currently sitting at about 1% for MySuper products, the pace of these fee reductions is too slow. For example, Vanguard's MySuper product charges just 0.58%, being the lowest cost, while the most expensive charges almost three times that at 1.5%.

"Betashares' proven record of success as a market leading disruptor bodes well for the impact it will now have on superannuation," Dunnin s.ays

"Where Betashares' low fee, index-based investment strategy will come into its own will be for fund members choosing asset class single sector funds such as Australian or international equities, fixed interest, or property.

"This is because very few of these investment strategies beat the capital market benchmark indexes. Indeed, in international equities, the top performers are almost always indexed options.

"The biggest advantage market players like Betashares will have is that explaining how its products work will be so much simpler than for more complex products."

And Betashares does intend to expand the super business' existing investment offering, as well as add further financial education and member tools in order to position the fund for sustainable growth, Vynokur confirmed.

"For most Australians, superannuation is the largest asset outside of the family home and plays a key role in each Australian's wealth journey and retirement outcomes," he says.

"As such, while ETFs will always remain the bedrock of our business, we are equally determined to bring our ethos of diversification, cost effectiveness, investor education and engagement into the superannuation sector, and it is a natural next step in our growth strategy."

The sale is subject to customary regulatory approvals and conditions and is expected to complete during 2024.

Offloading the superannuation business is the latest step in Bendigo and Adelaide Bank's exit from the wealth industry, having sold its financial advice business to Bridges Financial Services in 2019.

This article first appeared on Financial Standard

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