Speaking to InvestorDaily, Chant West director Warren Chant said the big institutional retail players have come up with a price point that will make them competitive with industry funds.
“For an account balance of around $50,000, somewhere between 100-120 basis points is the price they’re talking about,” he said.
But while the MySuper offerings of retail funds are getting closer to the industry funds when it comes to price, they are still lagging behind when it comes to performance, said Mr Chant.
“There’s no question that the industry funds have historically been better performers. And we don’t see that really changing,” he said.
“If anything, the difference in performance will probably widen a bit because the retail funds have introduced quite a bit of indexing to get to their [new] price points.”
But while the retail funds will continue to fall behind on performance, “superannuation’s not just about investment returns”, he continued.
“It’s about getting people engaged and getting people to understand what super’s about and what their goals are – and the retail funds are better set up to be stronger in that area,” Mr Chant said.
“It costs money to get members engaged. As people say, superannuation is a product that has to be sold – it’s not bought.”
Competition in the superannuation space is set to intensify, and industry funds as a group will have to spend much more money to compete, according to Mr Chant.
Chant West issued its latest report on superannuation returns yesterday, which revealed that 2013 was the best year for median growth funds (ie, with 61 to 80 per cent invested in growth assets) in 20 years.
Median growth funds returned 17.5 per cent in 2013 – the second highest result since the introduction of compulsory superannuation in 1992, according to Chant West.
“Funds have bounced back strongly from [the global financial crisis] and now stand about 21 per cent above their pre-GFC high achieved in October 2007. They’ve gained an impressive 64 per cent since the GFC low-point, which came at the end of February 2009,” Mr Chant said.
