Master trusts must open up to scrutiny, Weaven says

Garry Weaven, chair of Industry Fund Services (IFS), has challenged master funds to face a public fee audit after research commissioned by IFS once again found industry funds offered better performance and lower fees than their commercial rivals.

“;Master trusts claim they offer lower fees than those published in their product disclosure statements,” Weaven said. “We call on them or the regulator, to prove these claims through a public audit process, with full, random audits of claimed fees and costs.”; Weaven’s comments followed the release yesterday of the seventh survey of super fund fees and returns commissioned by IFS and carried out by industry research group Rainmaker. The latest study found that over one year, industry super fund members would have paid on average $377 less fees over one year and $2,252 less over five years compared to the average master trust. As well, Weaven said the survey showed that industry funds delivered more money in individuals’ super accounts at both the employer super and personal level. For example, the study found that on average, for workplace super, industry super funds delivered $738 more dollars in their members’ accounts over one year than retail master trusts, $2,820 more over three years and $5,372 more over five years. In the personal market for those members investing in growth options, the Rainmaker report found industry super funds delivered $677 more dollars in their members’ accounts than master trusts over one year; $3,909 more over three years, and; $13,746 more over the five-year period. According to Rainmaker, these results are due to investment outperformance as well as lower fees and costs of industry funds. “;There are two key points to remember from any research on how superannuation funds are performing for their members. First, however you split the market, industry super funds continue to outperform the retail master trust sector,” Weaven said. “;And secondly, industry super funds deliver that performance to all their members. Members in master trusts may be able to get employer driven discounts, but these are not transparent.” While the Investment and Financial Services Association (IFSA) was not able to comment before the I&T News deadline it has criticised the IFS studies in the past for not comparing ‘like with like’. According to IFSA, the IFS surveys neglect to take account of other member benefits such as insurance when assessing the merits of master trusts versus industry funds.