Retirement
Does the superannuation industry need more transparency?
Australians are passively investing $2.9 trillion into funds that are shrouded in secrecy and lack of transparency; investors’ values and what they invest in may not align, an industry expert has suggested.
Does the superannuation industry need more transparency?
Australians are passively investing $2.9 trillion into funds that are shrouded in secrecy and lack of transparency; investors’ values and what they invest in may not align, an industry expert has suggested.
According to Kent Kwan, co-founder and CEO at Elevate Super, many superannuation funds have no independent sustainability framework and people may not know if their super fund is investing sustainably.
“Australians, particularly younger Australians, tend to view super as an unimportant and ineffective asset.”
“The reality is, our combined super investment is impactful, and it’s vital we’re comfortable our super is being used to support and make us part owners in industries which align with our core values while delivering competitive returns,” Mr Kwan said.
As the volume of Australian super draws parallel to the GDP of Canada, Mr Kwan believes it is important for members to review their super and ensure they are comfortable as to what this money is being used for.
“It is not currently mandatory for Australian super funds to provide enough detail to know whether the investment of your super aligns with your core values.”
“If you’re dissatisfied with the information provided by your existing fund, consider other super funds which are transparent about where your money is going.”
In a report on 57 superannuation funds, Responsible Investment Association Australia found that funds with strong ESG outperformed their peers.
The 34 responsible investing funds had an average return of 7.33 per cent, slightly above the returns of non-responsible investing funds, which returned 7.31 per cent.
Over a three-year horizon, responsible investing (RI) funds outperformed non-responsible investing (non-RI) funds, 9.06 per cent compared with 8.65 per cent.
The five-year average had the greatest divergence – RI funds gave 8.14 per cent, while non-RI funds produced 7.7 per cent.
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