Australian Prudential Regulation Authority said Thursday that only one of 64 balanced MySuper default funds accessed by APRA for the latest year came up short in the third annual performance test ushered in under the Your Future, Your Super reforms at the start of the decade.
The latest result is down considerably from five failed default funds in 2022 and 13 in 2021, the performance test's inaugural year — a potential sign of progress for the YFYS goal of encouraging industry consolidation by weeding out weak superannuation fund performers.
Margaret Cole, APRA's deputy chairwoman overseeing superannuation industry regulation, in a news release called the annual performance test a "powerful tool to help APRA hold trustees to account for product performance, fees and costs."
"Since its introduction in 2021, nine underperforming MySuper products have exited the market and a total of 800,000 members, with combined assets of A$39 billion ($25.3 billion), have moved to better performing products," Ms. Cole said.
For the latest year, APRA said only AMG MySuper, a Brisbane-based fund with roughly A$1.5 billion in member assets at the close of 2022, failed the test — its third consecutive year of falling short. The fund's trustee plans to shut down the default option, APRA said.
Acclaim Wealth, the promoter of AMG Super, in a "significant event notice" on its website said the fund's trustee, Equity Trustees Superannuation Ltd., would terminate its MySuper option by early 2024.
In line with Your Future, Your Super strictures, the fund had been closed to new participants in 2022 after failing APRA's performance test for a second year in a row.
For the latest year, the performance test was extended to 805 "trustee directed products" — part of the superannuation industry's "choice sector," in contrast with MySuper default options, the APRA news release said.
APRA, in a footnote on the release, defined trustee-directed products as "multiasset products where the trustee has control over the design of the investment strategy of the product."
APRA said 96 trustee-directed products failed the performance test, with three-quarters of that total offered by just four trustees: N.M. Superannuation Proprietary Ltd., Nulis Nominees (Australia) Ltd., Oasis Fund Management Ltd., and OnePath Custodians Pty. Ltd.
Ms. Cole called evaluating choice products more nuanced, as participants in those offerings "make active decisions about their investment options and some might select products for reasons beyond performance."