Industry funds out-perform over all time periods

Australia’s industry superannuation funds again credit their investment in infrastructure for out-performance versus the country’s retail funds.

Australia’s approximately A$281 billion (€190 billion; $254 billion) industry superannuation (super) fund sector, which is known for investing heavily in infrastructure, has once again outperformed the retail super fund sector across all time frames, according to an Industry Super Australia statement.

The rate of return on industry funds’ investments averaged 17.32 percent for the past year, according to SuperRatings’ Fund Credit Rate Survey to October 31 2013 – a comfortable margin above the average 16.1 percent returns delivered by retail superannuation funds, which are typically owned by banks.

Across all five time horizons (1-year, 3-year, 5-year, 7-year and 10-year), industry super funds outperformed the retail funds by between 0.13 percent and 1.8 percent.

Although a healthy showing, the industry funds’ out-performance of retail funds has slowed slightly since August, when the margins ranged between 0.47 percent and 1.83 percent. In absolute terms, however, the situation is rosier: 1-year returns increased from 17.17 percent a few months ago to 17.32 percent now.

The lowest returns came from the 7-year time frame, which showed a 4.54 percent return for industry super funds. However, that was still much better than the 2.75 percent return that retail funds earned for that time frame, according to the release.

“The combination of [the representative trustee] model, the strong investment in infrastructure by industry super funds, and a run only to benefit members philosophy is delivering better outcomes for industry super fund members,” Industry Super Australia chief executive David Whiteley said in a statement.

The research follows the announcement that First Super, the A$1.7 billion industry super fund, has seen a 13.6 percent return for its conservative option the past fiscal year. It’s less conservative option has more growth potential. Overall, the fund has an 8.1 percent allocation to infrastructure.

TWU Super, another industry super fund in Australia, with A$2.84 billion assets under management, also recently announced that its chief executive Deborah Jackson has resigned for personal reasons. Frank Sandy, the current chief financial officer, will serve as acting chief executive for the time being, according to a TWU statement.