ASIC looks to avoid great expectations

The Australian Securities and Investments Commission (ASIC), for the first time ever, has released super fund performance data aimed at providing members with reasonable expectations as to the levels of return they can expect from various funds and options.

The data is designed to assist and encourage members to judge the investment performance of their super fund, with funds categorised by type and option.

The three types of funds are split into retail, industry and large corporate funds, and then distinguished further in terms of ‘growth’, ‘balanced’, ‘capital stable’ and ‘capital guaranteed’.

The ASIC data was compiled using Assirt, Morningstar, SelectingSuper and SuperRatings statistics and details the performance of the various funds and options over five and 10 year periods.

The regulator now plans to publish updated information every six months with updates to be issued in February and August.

The performance table shows the lowest and highest average returns submitted by the four ratings agencies in each category over five and 10 years.

ASIC consumer protection executive director Greg Tanzer emphasised that the four rating agencies “remain responsible for the data, and we have not independently verified it”.

Tanzer said the category labels are “based on what we believe to be the types of labels used in industry”, with the researchers asked to survey funds compatible with those categories.

He acknowledged that “potentially there is room for argument over what a growth fund is and what a balanced fund is, for example, but we believe these are a reasonable explanation for consumers.”

The release of the performance data had been planned for a long time, he said, and was not specifically intended to coincide with choice.

“We have long been on to consumers about the need to pay attention to fund returns and costs, and the table is intended to provide consumers with realistic idea of what is a reasonable return.”

He emphasised that ASIC was “not trying to stipulate what a reasonable return was because this varies from person to person.”

“What we can do however is put out factual material that says if you are looking for an industry average here's one for these different types of funds.

“We’re trying to promote a view that with super you got to look at the longer term, and we were trying to say that over the longer term these returns tend to get smoothed out.”