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Finding middle ground means 90% of funds will pass performance test

Mike Taylor11 August 2022
Middle Ground

Around 90% of MySuper products are likely to pass the upcoming superannuation performance test and mostly because they have adjusted their investment and fee settings to do so.

That is the bottom line of an analysis generated by SuperRatings which found that taking a balanced approach was more likely to see a fund pass the performance test than a more aggressive approach.

SuperRatings said it investigated the drivers of performance against the performance test and “unsurprisingly found that allocations to unlisted property, diversified fixed interest, Australian and international shares had the greatest impact on whether an option passed the test or not”.

The ratings house produced a table which confirmed the manner in which the performance test methodology tended to force superannuation funds into the balanced middle:

Option Type % Estimated to pass March 2022 % Estimated to pass June 2022
Capital Stable (20-40) 75% 88%
Conservative Balanced (41-59) 80% 91%
Balanced (60-76) 83% 93%
Growth (77-90) 84% 92%
High Growth (91-100) 74% 85%

 

Predicting that 90% of products would pass the performance test based on 30 June, 2022, data, SuperRatings noted that this was an improvement on the 31 March 2022 data which estimated that 20% of funds wld have failed the test.

It said the shift in the proportion of options passing the test also highlighted the impact a single quarter can have on reported performance test outcomes.

“Despite the limited ability of funds to improve upon eight-year performance over a short period of time, those who are close to failing the test need to ensure they position themselves as strongly as possible, as the rolling nature of the test means the test result is impacted by both performance today and from the same period eight years ago,” it said.

“SuperRatings investigated the drivers of performance against the performance test and unsurprisingly found that allocations to unlisted property, diversified fixed interest, Australian and international shares had the greatest impact on whether an option passed the test or not,” the SuperRatings analysis said.

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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Anon E Mouse
1 year ago

Mediocrity reigns supreme