The PC analysed the performance of all APRA-regulated funds over the 13-year period to 2017.

Nine of the underperformers, none of which are named, were retail funds (of 11 in the sample), 14 were industry funds (of 38 in the sample), three were corporate funds (of 13) and three were public sector funds (of 6).

The PC found the best performers to be large, non-profits.

“The largest industry funds experienced average net returns that were two percentage points higher than the smallest funds,” it said.

Nine of the underperformers, none of which are named, were retail funds (of 11 in the sample), 14 were industry funds (of 38 in the sample), three were corporate funds (of 13) and three were public sector funds (of 6).  Greg Newington

But not all industry funds deliver excellent returns.

APRA figures show there were 18 funds whose returns over the past 10 years fell below the sector-wide median for a balanced-style fund, which was 6.2 per cent over the 10 years to June 30, 2018.

Even so, none of the 18 performed badly enough to fall into the bottom quartile of performance.

In fact, the Industry funds lobby claimed that four of the 18 – Intrust Super, Media Super, Meat Industry Employees Super and TWU Super – are in the top quartile.

Across the system, small industry funds had an average 10-year return of 5.8 per cent compared to 3.3 per cent for small retail funds.

There is particular onus on default super funds to perform well because they are the ones listed in industrial agreements.

Key objective

Industry Super Australia chief executive Bernie Dean said underperforming funds, regardless of size or sector, should exit the industry.

“But suggesting there is a problem particular to industry funds or default funds is just plain wrong,” he said.

“Size isn’t necessarily a barrier to a fund performing well by delivering good returns to its members.

“A key objective of reform must be to weed underperformers out of the system and find sensible ways of connecting workers with quality funds, but this should apply to all sectors.”

There is no authoritative, consumer-friendly data identifying dud funds.

Ratings agencies publish league tables featuring the best performers; but are coy when it comes to the worst performers.

When The Australian Financial Review asked APRA to provide net returns for MySuper products over time, a spokesman said: “There are 106 MySuper options, and APRA would have to calculate this manually for each and every one of them. This is not something we have the capacity to do at short notice on an ad hoc basis. However, we are working to have this information included in the quarterly MySuper data publication later this year.”

In its final report in January, the PC warned about the ability of sub-scale funds to deliver for members and said more mergers were needed.

“Many small funds with high average expenses have exited the system, but a large tail remain,” it said.

“About half – some 93 – of all APRA-regulated funds have less than $1 billion in assets, and many underperform.”

Indeed, the Australian Securities and Investments Commission, one of two regulators in super, is looking for a new default provider for its employees but such are the risks with smaller funds it will not consider any fund with less than $10 billion in assets.

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