The Australian Prudential (LON:PRU) Regulation Authority (APRA) has identified 96 trustee-directed superannuation products that failed its expanded 2023 Your Future, Your Super performance test.
The failed products represent almost 10% of the trustee-directed products assessed, covering platform and non-platform categories.
Super fund members would be wise to keep an eye on their mailboxes with funds that failed annual tests required to notify their members by September 28.
This year, the test extended its scope to evaluate 805 trustee-directed products. Specifically, the test found that 20 of 500 non-platform products and 76 of 305 platform products were substandard.
Of the failures, a significant 75% are tied to products offered by NM Superannuation Proprietary Limited, Nulis Nominees, Oasis Fund Management Limited and OnePath Custodians.
Notably, the Australian Retirement Trust’s QSuper Socially Responsible fund will close after it failed to pass.
APRA deputy chair Margaret Cole said: “The annual performance test remains a powerful tool to help APRA hold trustees to account for product performance, fees and costs.
"All trustees must take responsibility for the products they offer and ensure they are in their members’ best financial interests.
“Members in trustee-directed products make active decisions about their investment options and some might select products for reasons beyond performance. Nevertheless, all trustees must take responsibility for the products they make available and ensure the products they offer are in their members’ best financial interests.”
The test evaluates multiple variables including net investment returns, asset allocation, fees and costs over an eight-year period, if applicable. A consecutive failure results in severe repercussions, including the prohibition of accepting new members.
The median administration fees for platform trustee-directed products were the highest at 0.54% of assets, compared to 0.27% for non-platform trustee-directed products and 0.26% for MySuper products.
Default MySuper options show improvement
AMG Super’s AMG MySuper was the only one of 64 MySuper products assessed that failed to meet the test benchmarks, marking its third consecutive year of underperformance. That is a clear improvement on the five MySuper products that failed the prior year and the 13 that failed to pass in 2021. MySuper products remain a default option known for their simplicity and lower costs.
Since testing began in 2021, nine underperforming MySuper products have exited the market, prompting 800,000 members with a combined $39 billion in assets to switch to better-performing options.