ETF manager Betashares will have its work cut out after the fund it acquired to get a toehold in the super industry, Bendigo Super, was called out for underperformance by the prudential regulator.
The underperformance was revealed in APRA’s 2024 Comprehensive Product Performance Package (CPPP). While all MySuper products met the performance test requirement this year, the heatmap showed a simple pass or fail score of the performance test could mask some return nuances.
The Bendigo SmartStart Super, which is also its default lifecycle MySuper product, flashed dark red in three out of four 10-year metrics (net investment return; NIR relative to simple reference portfolio; and net return with $50,000 rep member, all on a per annum basis).
Betashares officially completed the acquisition of Bendigo Super from Bendigo & Adelaide Bank this month. It followed rival passive investing house Vanguard into the retirement market but the two had different approaches to getting their offerings off the ground.
Vanguard Super’s member acquisition so far is driven by financial adviser-facing channels and direct-to-consumer marketing.
It has accumulated almost $2 billion retirement assets under management since it launched close to two years ago, while the Bendigo Super acquisition would have immediately handed Betashares $1.4 billion in superannuation AUM.
Another difference is that while Vanguard closed its Australian institutional fund management business after establishing the super arm, Betashares will continue working with its institutional clients.
One industry observer said it would not be surprising if Betashares weighed both the creation and acquisition approaches and decided the latter to be more commercially viable, and it’s always been Betashares’ intention to eventually “reinvent solutions” and treat Bendigo Super as “a shell to build off from”.
“[Superannuation] is a different world to managed funds…but right now it’s bit of a funny one,” they said.
It is understood that Betashares went into the Bendigo Super acquisition with its eyes open following extensive due diligence process, which suggests the underperformance issue mustn’t have been a deal-breaker.
Betashares declined to comment on the heatmap result or on it future plans. While it said in a media statement this month that it is looking to make several new hires, no specific names have been announced.
“Betashares will also undertake a review of the fund’s investment menu with a view to building enhanced superannuation solutions,” the company said then.
Elsewhere on the heatmap, four MySuper products from four funds were called out for having high administration fees: OneSuper, Smart Future Trust, IOOF Portfolio Service Superannuation Fund and Prime Super.
“While performance of products across the entire superannuation industry has improved following the introduction of the performance test and APRA’s heatmaps, there are still underperforming products that need improvement particularly among choice product offerings,” said APRA deputy chair Margaret Cole.
“APRA has no tolerance for members to remain in poorly performing products without credible and timely rectification by a trustee.”
