Contrary to claims by the Grattan Institute, Australian superannuation fund fees are in fact "quite reasonable" by international standards, says Chant West.
In its second submission to the Financial System Inquiry, Chant West has disputed the findings of the Grattan Institute’s April 2014 report, Super Sting, which claims super fund fees “ought to be substantially lower than they are”.
“We believe that fees in Australia are reasonable when we take into account the characteristics of our industry,” the submission from Chant West said.
“Australia has a high level of investment in equities, which are relatively expensive to manage. We also have a large number of funds, many of which are relatively small in scale,” the submission said.
“Offsetting these factors are the highly competitive nature of the industry and the number of investment managers competing for business.”
Chant West also pointed out that the Grattan Institute’s Super Sting report claims Australians pay “far too much” by comparison with other countries.
“This is a difficult claim to substantiate. Many industry commentators have noted that comparing fees across countries is problematic because of the differing nature of each country’s superannuation system and approach to disclosure,” the submission said.
Chant West further disputes the Grattan Institute's claims that high-fee funds do not generate higher gross returns, lower fees are the best guide to subsequent performance and funds incur “substantial costs” in active management.
“The key difference between our analysis and the Grattan report is that we assess investment performance net of investment fees only, whereas the Grattan Institute bases its analysis on total fees paid,” Chant West said
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