The problems of peer risk and a focus on short-term performance in the superannuation industry are likely to get worse as the amount of information on funds' investment behaviour increases, an industry panel has said.

During a discussion at the Actuaries Institute earlier this week, participants agreed that increasing regulation, in particular disclosure requirements, for super funds would place more emphasis on short-term results.

"I'm firmly of the view that it will increase short-termism," AustralianSuper investment manager Alistair Barker said.

Although he said opposing more scrutiny was not the answer, he questioned whether it was in the best interest of the member and would not play into the hands of competitors.

"What you are doing is releasing a whole lot more information, which leads to potentially more questions, more scrutiny," Barker said.

"I'm not sure that a member is going to want to look at our portfolio disclosure, which has 8000 line items, and trying to make sense of that.

"But what it will do is open up significantly more ammunition [for competitors]. We don't have a problem with more scrutiny, we just prefer it to be constructive."

Fellow panellist and SuperRatings chairman Jeff Bresnahan was asked whether his company's surveys did not add to the fact that super funds focused on the short term and have similar asset allocations.

In response he said the research was never intended for funds to compare themselves, but instead was aimed at fund members.

"If we are talking about super funds here and we are, then we don't really care what effect it has on them," he said.

"If you go back to why we publish the surveys back in 2003, is because the only available surveys available in the industry at the time were Mercer's and Intech.

"The whole intent was to publish a survey for consumers and not for super funds."

But Bresnahan also said they were mindful that their surveys would not focus specifically on individual super funds, but on industry averages for the different investment options, such as balanced, growth and high growth options.

The problem of super funds placing too much emphasis on performing in line with their competitors comes at a cost to members, Professor Jack Gray, investment roundtable director at the Paul Woolley Centre for Capital Market Dysfunctionality, said.

"Ron Bird and myself at UTS [University of Technology Sydney], we are in the process of writing a piece on agency costs in superannuation.  We estimate there is about a three per cent a year cost from agencies," he said.

"One per cent is because they try to compete on returns and competing on returns, simply destroys returns.

"You compete on returns, you get pushed in momentum, momentum pushes prices further away from fair value, they have to return [to fair value] and you lose."

Gray said there is another one per cent cost from the excessive number of funds that are all doing the same thing.

"Have a look at the agency cost in Vision Super and Equip, now that has nothing to do with rational decision-making," he said.

"Then there is another one per cent from the inability to make decisions, which is a form of herding."

According to Gray, the industry should have only a handful of super funds, run by independent organisations.

Barker agreed that the focus on short-term performance figures was unhelpful, but also said that the numbers played a role in helping managers to keep track of their progress.

"The inordinate focus that is placed on short-term returns is there and it is very difficult to fight, but . all these numbers are just a means to an end," Barker said.

"We are just saying: 'Are we tracking towards our objectives?' Not: 'How are we going this month?'," he said.

Bresnahan also pointed out the harsh implications that taking a different route could have for a fund.

"MTAA did something completely different in this industry back in 1999 with their exposure to alternatives," he said.

"Was it wrong what they did? I would argue not, and, in fact, their performance is still second quartile to this day, so it's not as if they are bottom quartile.

"Yet, they are ridiculed in the industry and have been so for the last five years because they stuck to their guns."

Gray argued that the best thing to do is to make all information available, but at the same time to make it slightly cumbersome to get to it.

"You put all the information on the intranet, show the board how to access it by a click of the button and they will never look at it," he said.

Super fund members on the other hand were already doing the right thing, he said.

"I actually have never seen evidence that people do leave funds [because of performance]; there is a massive inertia," he said.

"I think that is very sensible; I think it is very sensible that members don't bother with their account statements and don't open them."