UniSuper manages the lion’s share of its total assets in-house, enabling it to operate more efficiently and charge lower fees than nearly all of it peers.
“We can pay ourselves a much lower percentage of assets and we can run the fund more efficiently and do it just as well,” said chief executive Kevin O’Sullivan, whose fund won Default Fund of the Year at the Conexus Financial Superannuation Awards, held at the Ivy in Sydney on Thursday night.
“Ten years ago, we had a small proportion of assets managed internally but now our in-house team manages two-thirds of the money,” said the head of the $70 billion fund with 420,000 members.
Last October, the fund – whose members are affiliated with the higher-education sector – cut its fees for all members, so that none pay more than 3 per cent, even on small account balances.
This year, UniSuper’s fellow nominees for Default Fund of the Year were AustralianSuper, First State Super, Equip and QSuper.
In judging this award, a higher weighting was given to investment returns than in other categories, due to the nature of the relationship with customers.
The award was presented to UniSuper by Alan Kirkland, chief executive of Choice, who said the fund excelled in its investments, with impressive projected returns, strong historical returns and one of the lowest investment volatilities of all entrants.
“This fund also had the second lowest fees of all entrants and was a standout in member services and overall governance as well,” he said. “The entry highlighted the heritage of the fund, high standards and a focus on savvy investing that is in the best interests of members.”
This comes just as the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has shone a spotlight on the management fees of superannuation funds. O’Sullivan said UniSuper’s aim was to provide a great fund for members, give them great value and provide excellent service.
“The two components of value are investment performance and low fees,” he said.
Referring to the Productivity Commission’s recommendation for a panel-selected shortlist of the top 10 funds likely to deliver “the best outcomes” for members, the UniSuper chief said he was against the idea because it would have an adverse impact on the sector.
Aside from penalising small funds that do a good job, he said, the market wouldn’t be as efficient.
“If you rate 12th, does that mean you are a bad fund and will you likely see outflows?” he asked. “There are lot reasons why the top 10 is a suboptimal way to deal with the poor performance issue.”
About the awards
Funds are invited to nominate themselves for awards across 11 categories. The committee assesses a broad range of quantitative factors – including fees, investments and member services – and overlays this with a number of qualitative considerations.
The Conexus Financial Superannuation Awards are the only truly independent awards within the sector. There is no entry fee and the winners are decided by a volunteer judging committee that has broad representation from all areas of the industry, including the retail and industry fund sectors, and consumer representation.
Last year, the committee added a 10 per cent weighting to governance in its assessment of the funds’ offerings. This included an examination of gender balance at the board and executive level, director engagement and director tenure.
Conexus Financial head of institutional content, Amanda White, chairs this year’s committee, which agreed that good governance was an important ingredient for fund success.
The other committee members are:
- California State Teachers’ Retirement System CIO Chris Ailman
- FEAL chief executive Joanna Davison
- CHOICE chief executive Alan Kirkland
- Financial Services Council chief executive Sally Loane
- Rice Warner chief executive Michael Rice
- Former parliamentary secretary for financial services Bernie Ripoll
The 2019 Fund of the Year award goes to the nominee the committee believes has the best broad proposition and the highest level of innovation and overall excellence.
The 2019 Conexus Financial Superannuation Awards are sponsored by event partner AIA Australia.