Australia's worst-performing super funds revealed

A host of Equity Trustees and OnePath options once again dominated the worst-performing and most expensive Choice products in APRA's newly published heatmap results.

Of the 407 options with an eight-year return history APRA analysed, 182 or 45% underperformed the benchmark.

APRA singled out 80 options that significantly underperformed. They are operated by trustees AUSCOAL Superannuation (Mine Super), Avanteos Investments (Colonial First State FirstChoice Super), AvSuper, BT Funds Management (Retirement Wrap), EISS Super, Perpetual (WealthFocus Superannuation Fund) and REI Super.

But it was Equity Trustees and OnePath that dominated the worst performers.

Equity Trustees' Zurich Retirement Product, Umbrella Financial Plan Super, Crescent Wealth Superannuation Fund, and smartMonday were products marked with the lowest grade of dark red.

A slew of OnePath products such as Pendal Monthly Income Plus, Perpetual Conservative Growth, UBS Defensive, and a range of its in-house options such as OptiMix Growth and OnePath Balanced Index, failed to deliver for members.

Several BT options were also slapped with a red rating - Pendal Growth Shares, BT Super For Life Advance Higher Growth, BT Super For Life Advanced Balanced and BT Super For Life Advance Higher Growth - were among the worst performers.

APRA deputy chair Margaret Cole says there are "still far too many products delivering sub-standard investment returns to fund members".

"As a result, APRA's supervision of poorly performing Choice products will intensify, and trustees can expect even greater scrutiny of their product offering. Trustees with products that are underperforming or have unjustifiably high fees - or both - will need to explain why they haven't already moved their members to products with better performance and better fee structures," she says.

APRA also detailed which products charged exorbitant administration fees.

Diversa Trustees' numerous subplans like Verve Super, Spaceship Super, Cruelty Free Super and Slate Super are among the most expensive.

Slate Super and Verve Super, for example, charge 0.89% and 0.90% respectively on a balance of $50,000. OnePath options are the costliest, with some charging 1.22% per annum, followed by Equity Trustees options that rake in as much as 1.27% p.a.

Among closed products, those with significantly high fees also have a greater tendency to have investment options that underperformed relative to investment benchmarks, says Cole.

"RSE licensees must be able to demonstrate the value of their product offerings (including services and features) and that fees charged are in the best financial interests of members. Where fees are not required to support the provision of product and member services, APRA expects RSE licensees to reduce fees or consider other actions such as transferring members to lower fee products or fund consolidation, to improve outcomes for members," she says.

Overall, two-thirds of Choice products that are closed to new members performed significantly worse relative to the heatmap benchmarks. Additionally, average fees are higher in Choice products that are closed to new members.

The data used was to June 30, 2022.

This article first appeared on Financial Standard

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