The advent of MySuper has led to a convergence in fees between non-profit funds and actively managed retail funds.
Chant West’s Super Fund Fee Survey shows fees for non-profit funds increasing from 97 to 101 basis points on average, while fees for actively managed retail funds have fallen from 146 to 132 basis points.
The small rise in fees for non-profit funds is due charges for investments rising from 31 basis points to 33, and for administration rising from 66 basis points to 68. The latter is due in part to Stronger Super requirements and the need for an operational risk reserve.
Actively managed retail funds saw a small rise in administration costs too. These rose from 79 to 81 basis points, but had a fall in investment fees from 67 to 51 basis points.
The survey notes actively managed retail funds reduced their investment costs to some extent by increasing their level of passive management.
“These funds also tend to keep investment fees as low as possible and ‘load up’ administration fees. The reason is that they can offer corporate plans discounts on administration fees but not on investment fees,” stated the survey.
It adds that administration charges are higher for retail funds due to the addition of a profit margin, but also because they provide more services.
Broken down by industry sector the survey found the average MySuper fee was as follows:
Industry funds 1.04
Public sector 0.96
Retail active 1.32
Retail passive 0.95
- The figures above are used for a 50 year old member invested in a growth fund (61 to 80 per cent growth assets). At this age, lifecycle products typically have a 70 per cent exposure to growth assets, which is consistent with the risk and return profile of most non-lifecycle products.