Maritime Super flashed dark red on APRA’s heatmap for both performance and fees yet the 52-year old $6 billion fund is not going to change a thing.

Chief executive, Peter Robertson, said the investment strategy would not change because the MySuper product, which had the worst performance of all those listed by the regulator, was only the default for members who are 55 or over to protect their money against a significant market downturn. He also flagged that Maritime was already looking for potential merger partners.

“We are not going to change because of the heatmap,” said Robertson. “We have a lot of older members with very high balances and during the global financial crisis we had members ask us why we didn’t protect their money. Our default is designed to protect against any downturn.”

The Australian Prudential Regulation Authority published the results of the heatmap earlier this week using a gradient colour scheme from white to dark red to flag how much a MySuper product deviates from the benchmark. Maritime’s default fund, which holds just 15 per cent of the assets, had the worst net investment return relative to the regulator’s reference portfolio of minus 1.1 per cent. It was also among the highest for total fees.

Robertson said APRA’s new appraisal system had not yet been able to account for funds that have this defensive overlay. He also said that Maritime had already made changes to the default product earlier in the year. Deputy chair Helen Rowell said the regulator had contacted the trustees of the worst-performing funds and if they had not improved in “good time” they may pressure them to merge or force an exit.

“This is the first iteration so I assume (APRA) will listen to the feedback from the industry,” said Robertson. “I do think it was premature. The MySuper offering hasn’t been around long enough to gauge long term performance.”

Robertson said that if the regulator had used Maritime’s balanced fund, which has more assets, it would have come up “perfectly fine.” He said his team had already made changes to the MySuper product prior to the results so that the protection overlay only applied to members who are 55 or older. The fund’s younger members are instead put into a more growth-oriented portfolio.

“Our MySuper option is designed specifically for our older membership base,” said Robertson. “While we are not focussed on peer comparison, the heatmap provides a useful benchmark to see what other funds are doing, but it doesn’t inform our investment strategy.”

On fees, Robertson said Maritime’s administration fee were already “quite competitive” and had come down from being “in the middle of the pack.” He added that as their assets were all managed externally, some of the investment managers they used were expensive.

“We don’t like performance fees, but sometimes you have to pay (for returns),” he said. “Looking at a net return for members is more of a measure than fees alone, that is the reality of it.”

As for APRA’s push to see smaller funds merge, the chief executive said they were “constantly looking” at other merger partners and opportunities and would only do another deal if it was in the best interest of members. This would mean the merger would have to provide a better service, a better return as well as lower fees.

“If we can do that we will look at it,” he said, without elaborating whether they were currently in merger talks. “We are not blind to the opportunity.”

Media reports last year suggested Maritime had looked at a potential tie up with Mine Super.

Sarah Jones is the deputy editor of Investment Magazine. She previously worked for Bloomberg News in London for more than 12 years covering equity markets and global asset management. Prior to moving to the UK, she worked for Australian Associated Press in Sydney covering economics and monetary policy.
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