APRA statistics comparing the board practices of industry and retail funds were not comparing apples with apples, according to Investment and Financial Services Association deputy chief, John O’Shaughnessy.

O’Shaughnessy was responding to criticism of retail super funds following APRA’s report last month on super fund governance, which some industry funds have taken as an indictment of their retail counterparts. O’Shaughnessy said comparing how retail and industry fund trustees spent their time, for example, had not taken into account the differences in what the funds were trying to achieve with different membership bases.

Retail boards would probably spend less time debating investment strategy than an industry fund board, he said, because asset allocation decisions had usually already been made at the individual member level, in consultation with a financial planner.

Industry funds had the majority of their members in a ‘default’ option, so trustees needed to spend more time structuring that portfolio . “For a retail member, most of the investment work has been decided before [the money] even gets to the fund,” O’Shaughnessy said.

The statistic that fewer retail trustees invest in the super funds they are directing was probably not an accurate reflection of the real level of investment, he added. “In the main, retail fund trustees are more likely to invest through platforms.

Therefore they may tend to understate the level of investment in the one fund because they diversify through the platform, but they would say they invested through [the platform provider].” Aggregating fund performance results under generic categories has skewed the reality of what returns retail funds are giving members, according to O’Shaughnessy. “Retail funds tend to have memberships with more members closer to retirement, which means they would take on less risky assets in their default fund, for example. Whereas industry funds tend to have a younger membership base so may be able to take on more risk.

– AIST Viewpoint, page 44