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I've seen this chart used to show industry super funds have done well even after fees and therefore we don't need a low cost default.
It pays to look at the technical addenda. The PC-constructed benchmark is not a good measure of performance, it is a low bar of basic competence.
It pays to look at the technical addenda. The PC-constructed benchmark is not a good measure of performance, it is a low bar of basic competence.
For admin fees in its benchmark, the inquiry used the median within the super universe (25th percentile fee for default product choices)
But this only tells us how competitive admin fees are against each other, not how good they are against an external reference (hint: not good)
But this only tells us how competitive admin fees are against each other, not how good they are against an external reference (hint: not good)
To benchmark investment fees the inquiry uses the fee for the largest ASX ETF in each asset class in 2017 and works back assuming fees fell by 5% pa
This is likely to be too high. E.g. In 2009 Vanguard Aus was charging ~17bps for global equities compared to a 44bps assumed cost
This is likely to be too high. E.g. In 2009 Vanguard Aus was charging ~17bps for global equities compared to a 44bps assumed cost
The benchmark also adds a conservative fee buffer of 10bps to the benchmark portfolio to allow for other indirect costs.
Finally fixed and other misc fees are excluded, whereas they are implicitly included in benchmark portfolios as the investment fee from the representative ETFs must cover every cost (except brokerage)
How do we compare this litany of fees to an "objective" good fund? We can use Sweden's default AP7 fund: It charges 11bps for equities and 4bps for bonds
In other words, the random cost buffer from two tweets ago is as much as Sweden's pension fund charges for *everything*
In other words, the random cost buffer from two tweets ago is as much as Sweden's pension fund charges for *everything*
Given how conservative the fees for this benchmark are, it is unsurprising most funds manage to beat it.
Frankly, I'm amazed some funds don't (what are they doing?!)
Frankly, I'm amazed some funds don't (what are they doing?!)
