Sunday, 21 April 2024

    Asset classes limit super returns

    Australian superannuation funds have reported strong overall investment performances – but have underperformed in two key areas that comprise nearly half their assets, according to new Rainmaker research, The New Daily reports.

    And according to the Australian Institute of Superannuation Trustees (AIST), the findings highlight the need to adjust super reform legislation to ensure all funds are covered by the new APRA performance measures.

    Rainmaker discovered that while Australian default super funds overall outperformed their benchmark returns, the situation is very different for two major asset classes: International shares and fixed interest.

    When it came to Australian shares, property and cash, super funds roughly equalled the returns achieved in the benchmarks for those asset classes (when superannuation management costs are included) over five years.

    However, super funds fell below the international shares benchmark by 3.2 percentage points and in fixed-interest classes, the underperformance was between 1.7 and 2 percentage points.

    “Australian super funds as a group are good managers of Australian shares, property and cash. Their performance in managing international shares and bonds is less impressive,” said Alex Dunnin, executive director of Rainmaker Information.

    “Trouble is, the asset classes where the superannuation sector is struggling to add value over the capital market indexes represents almost half of all superannuation assets.”

    “It’s important that the worst areas of underperformance in the super system are addressed,” said Eva Scheerlinck, CEO of AIST.

    “It’s unacceptable that the poorest-performing super products are not subject to performance testing.”


    How poorly performing asset classes are limiting superannuation returns
    (The New Daily)