Retail Funds Lost $75 Billion in 15 Years

A new report from the Industry Super Network said that for the past 15 years, super funds managed by banks and wealth management groups have investors losing at least $75 billion.

The timing of the report came with news that has boosted the push for the deregulation of the super as the banks are setting its sights on a $1.4 trillion super fund that will be the source of future profits.

If the government approves the deregulation, retail funds could end up losing a huge share of what is deemed as an emerging lucrative market.

The report made use of figures from the Australian Prudential Regulation Authority between 1996 and 2011. The report indicates an average return of 3.84 percent yearly for retail funds, which was less than deposit rates.

Meanwhile, public sector funds were at 6.47 percent in its return, while not-for-profit funds, which comprises in-house corporate funds, public sector funds and industry funds, had a 5.5 percent return.

In its analysis, the report said that if the retail sector were to match with not-for-profit funds, their retirement savings would have amounted to more than $75 billion.

In reaction to the report, the Financial Services Council said that this analysis in is misleading and bias, as there are other factors that were not considered, such as individual investment options.

The council also said that retail funds have older and more conservative members compared to others.