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Industry funds continue returns streak

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Bank-owned super funds have “two masters”, which means lesser returns, Industry Super has argued, while pointing to new data.

The latest Industry Super Australia (ISA) analysis of data from superannuation consultant SuperRatings has revealed that industry super funds’ returns beat bank-owned super funds returns over one, three, five, seven and 10-year metrics.

To ISA public affairs director Matt Linden, these results represented a strong connection between business model and member returns.

“Industry super funds send all profits back to their members, and this is reflected in better retirement savings returns,” said Mr Linden.

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“Bank-owned retail funds serve two masters, splitting returns between shareholders and members”.

Measuring the average annual rates of return to 31 January, the one-year metric saw industry funds return 12.7 per cent, 3.29 per cent higher than bank-owned funds.

Over the three-year metric, industry funds returned 8.3 per cent, 3.49 per cent higher than the average return from bank-owned super funds.

Industry funds reported an average return 2.94 per cent higher than bank-owned funds, at 10.0 per cent over five years and over seven years, the industry funds hit returns of 8.8 per cent, 2.66 per cent higher than bank-owned funds.

Over the 10-year metric, industry super funds delivered returns of 6.2 per cent, which was 2.21 per cent higher than bank-owned funds’ 4.0 per cent.

“Two per cent doesn’t seem like much, but over a lifetime it may add up to tens of thousands of dollars more – or, sadly, less at retirement,” Mr Linden said.

Different data

According to data from superannuation research firm Chant West, the gap between industry and super funds is smaller.

This is the Chant West data, released this month, measuring diversified fund performance across industry and retail funds to 31 January 2018:

  1 yr % 3 yr % 5 yr % 7 yr % 10 yr %
Industry funds 12.4 8.3 10.0 8.9 6.2
Retail funds 11.0 6.7 8.9 8.0 5.7
Difference 1.4 1.6 1.1 0.9 0.5

Comparing these figures to ISA's analysis of the SuperRatings data, below, shows differences in results of nearly two per cent. ISA noted that it was analysing the SR50 Balanced (60-76) Index. The SR50 index measures the median returns of the largest 50 super fund investment options. 

  1 yr % 3 yr % 5 yr % 7 yr % 10 yr %
Industry funds 12.7 8.3 10.0 8.8 6.2
Bank-owned funds 9.4 4.8 7.1 6.2 4.0
Difference 3.29 3.49 2.94 2.66 2.21
Industry funds continue returns streak
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