Lower costs associated with funds management will not always be in the best interests of super fund members, but improved transparency and comparability will. Chant West, a fund and multi-manager research firm, has recommended to the Cooper Inquiry into super that funds adopt 18 specific recommendations for standard disclosures in the three key areas of fees, investment performance and insurance. The firm also provided a separate report on insurance which principal Warren Chant says is the worst area for disclosure. “It would be almost impossible for the average person to make a reasonable comparison of super funds’ insurance offerings,” he said.

“It is difficult enough for us and we’re analysing funds all the time … We’ve been doing it for 14 years.” Chant says that most of the top-performing funds of the past few years have had above-average funds management fees – but delivered a higher net return for members. “You can’t have 10 or 15 per cent of your portfolio in alpha strategies paying 2 and 20 (2 per cent base fee and 20 per cent performance fee above a hurdle) and expect to get the whole thing for 60bps,” he said. Like most of the industry, Chant is critical of Jeremy Cooper’s MySuper scheme where funds would be forced to set up separate low-cost default options for members who do not elect a super strategy.

The three main industry bodies – AIST, ASFA and IFSA – have all voiced concern over the proposal. Chant says of the current disclosure system that the rules are so loose that they can be interpreted in different ways. “So what we’re saying to Jeremy Cooper and to the Government is: by all means press ahead with reforms that make the whole industry more efficient, but at the same time tighten up the disclosure so that everything’s transparent, there’s no scope for selective interpretation of the rules and everyone’s following the same conventions,” he says. In some instances some costs are not disclosed at all by funds

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