FirstChoice, a superannuation and investment unit of Colonial First State (CFS), reached $50.4 billion in funds under administration at March 31.
The distribution system, which offers superannuation trusts and managed funds to financial advisers and their clients, held 11.56 per cent of the retail investment market in the December quarter with funds under administration of $47.54 billion.
FirstChoice, operated by Commonwealth Bank of Australia-owned CFS, was launched in May 2002 with $200 million in client funds.
The fees charged by FirstChoice Wholesale Personal Super, which manages about $20 billion, rivals those of industry funds, says Warren Chant, director at superannuation researcher Chant West. Its “growth” investment option, which invests about 80 per cent of assets in riskier securities such as equities, and 20 per cent in bonds and cash, charges 101 basis points on balances up to $800,000. The average industry fund account balance is $29,000.
The $43-billion AustralianSuper, which Chant says is a cheap industry fund, charges an investment fee of 58 basis points for its “balanced” option plus an annual administration fee of $78, making it comparable to FirstChoice on costs.
AustralianSuper’s balanced fund returned 0.9 per cent in the five years to December 31 against the -1.8 per cent posted by FirstChoice Wholesale’s growth fund, according to Chant West. Chant says the industry fund’s investments in unlisted infrastructure, property and private equity helped it beat its retail rival, which invests exclusively in listed assets.