Petersen sees MySuper as a major disincentive to invest in manager skill, for no other reason than its relatively high upfront price tag. Jeff Bresnahan sees another irony here. While industry funds have consistently been the biggest investors in ‘manager skill’, mostly through their relatively high weightings to unlisted assets, they in one way have the least to lose from a big shift to much cheaper investment strategies. “HostPlus can launch Indexed Balanced and not worry about it at all. They’re not worried about investment costs, because they are sending all the work out to be done externally,” he says – nothwithstanding the fact that several industry funds have an interest in an asset manager, Industry Funds Management. “But the retail funds still manage a fair proportion of what’s in their super funds within their own funds management divisions. So they’ll be prepared to race a fair way to the bottom – but not to the point where a super cheap product begins to cannibalise the rest of their business.”

Join the discussion