Fattest cats pack it on as our super gets squeezed

Herald Sun, October 4, 2017

UNDERPERFORMING superannuation funds are getting bigger and fatter according to the latest analysis of Australia’s “fat cat” fund managers.

AMP dominates as the biggest fat cat fund manager and although, overall, the number of these funds are falling, the number under AMP’s umbrella is increasing.

The Commonwealth Bank also increased its ranking, from fourth to third biggest fat cat fund manager this year.

According to the fifth annual analysis by investment services provider Stockspot, there were 521 fat cat funds at June this year, compared with 638 last year.

The research into more than 4000 funds defines a fat cat as a fund underperforming its peer group by more than 10 per cent during the past one, three and five-year periods. Most fat cat funds also charge higher fees than the average.

Ranked by the number of fat cat funds they manage, ANZ topped the list with 218, followed by AMP at 87 and the CBA at 47. However, when ranked by the amount of customers’ money in the funds, AMP dominated with $12.9 billion, followed by Westpac at $5.6 billion and ANZ at $4.8 billion.

And despite Stockpot’s scrutiny, the money continues to pour in.

In the past financial year, there was $26.5 billion being managed by the top five fat cat managers, compared with $20.4 million the previous year.

Across all 521 fat cat funds, however, the amount of money has fallen from $59.4 billion to $45.6 billion this year.

“It’s incredible that the worst offenders, the banks, still drag their feet on helping customers avoid high super fund fees,” Stockspot chief Chris Brycki said on Wednesday.

“In some parts of life, ­paying more gives you more. Investing doesn’t work that way,” Mr Brycki said.

“Every dollar you pay comes directly out of your retirement lifestyle. The message is clear: the more you pay, the less you get.

“The good news is the number of fat cat funds is falling, ­albeit slowly.”

While the big banks in Australia continue to control the most fat cat funds, Mr Brycki also raised concern about industry super funds.

“It appears many industry super funds don’t fully disclose all costs and fees,” he said.

“When the super fund reporting standards change in 2018, we suspect some industry funds with low advertised fees will in fact have total costs that are 50 per cent to 100 per cent higher.”

Stockspot has also named the country’s best performing funds. The top five “fit cat” fund managers — consistently earning 10 per cent more than their peers, after fees — are Platinum Asset Management, Legg Mason, Ausbil, Investors Mutual and Fiducian Group.