Investors warned to research super funds

Investors have been urged not to compare super fund performances based on style names after an industry survey found only a tenuous link between the style names funds market themselves on and the aggressiveness of their underlying investments.

With member choice looming, the findings from the latest InTech Super Survey paint an ominous picture for an industry that is still in the formative stages of educating members and investors to a level where they can make informed decisions towards their retirement and savings.

“If you take a balanced fund, you’re not guaranteed to be comparing apples with apples. We’ve got a fund that calls itself balanced in our high growth universe and 26 balanced funds in our growth universe,” InTech chief investment officer Ron Liling said.

InTech defines balanced as those funds with between 40 and 60 per cent of growth stocks, while growth and high growth are funds with between 60 to 75 per cent and 75 to 100 per cent of growth assets, respectively.

“[For example] the MTAA Balanced Fund has 91 per cent of growth assets and therefore investors need to understand what the underlying assets of any given fund are.

“Only six funds labelled as balanced fell within the 40 to 60 per cent growth asset range - clearly this is not an apples with apples comparison,” Liling said.

The findings add to the confusion already apparent due to variations in the performances reported by groups such as InTech, in researching superannuation and investment funds.

However Liling said for InTech, investors and superannuation members needed to appreciate that its figures were calculated in terms of the investment returns made by the individual funds net of fees, and not the returns delivered to the customer.