Fewer but bigger industry funds now dominate super
Just months out from trustee-directed superannuation products facing the performance test, new analysis has confirmed how industry superannuation funds are increasingly dominating the market via mergers and at the expense of retail master trusts.
According to new analysis conducted by WealthData many of the retail master trusts may struggle to deal with the performance test environment in circumstances where they are now almost uniformly much smaller than industry funds.
The analysis shows that amid ongoing mergers there are now only 26 industry fund entities compared to 77 retail entities, and that the average industry fund is now almost five times larger than the average retail master trust.
Experience with the Your Future, Your Super performance test as it applies to MySuper products has shown that scale has often proved a vital element for superannuation funds, particularly in their ability to deliver lower fee structures.
The WealthData analysis shows that while key expenses have been reducing across all types of funds, industry funds have been leading the way and increasingly so as a result of the scale benefits delivered by mergers.
Where net contributions are concerned, the analysis points to industry funds having taken the lead since around 2012 with the gap widening after 2016 particularly following the impact of the Royal Commission on consumer perceptions of retail master trusts.
The analysis finds that industry funds now account for 33% of total funds having grown from 22% in 2016, while retail master trusts have declined to just 20% of the market over the same period.
It said that self-managed superannuation funds had remained steady at around 26% of the market.
The performance test applying to MySuper products has already resulted in multiple mergers and exits on the part of failed funds.
This is all going to go so well. Giant industry fund overlords will take listed companies private and will eventually run the country. Let’s not even start on the performance tests. They’re like measuring test scores after the students have graded themselves.
It’s all becoming farcical. Can the intelligent people take over again please.
Yep, it’s becoming a big problem. If you all do the same thing, you’re all going to get the same result.
These funds only objective is scale, it’s clearly a numbers game, how much SG can they get a week, is all they care for, they don’t want their members finding financial freedom. Like Gyms, all they want is membership, they don’t give a shit if you get in shape or not.
Then we have the retail trusts, offering far more superior options, with majority having an investment solution bolted alongside their super trustee.
Best thing I ever did, was get away from these unions on size fits all funds. Since moving over to a retail super trust, along with maximizing their investment trust, my investment strategy is actually going to fulfil my lifestyle and income needs, and with their superior choice to specialized options, I’ve knocked off close to a decade of having to go to work.