Which super funds are holding up the best?

WHICH super funds are riding the global investment storm the best? Which funds are sinking? And, which are fudging their performance?

Magnifying glass /File

Which super funds are holding up the best?

WHICH superannuation funds are riding the global investment storm the best? Which funds are sinking and taking the savings of their members with them? And, which funds are fudging their true performance?

We are well into the final quarter of the financial year and June 30 looms. But with it comes the prospect of every major super fund delivering a loss for their members.

Maybe the  "compare the pair'' advertising campaign for industry funds -- featuring two escalators going up at differing speeds -- should now show two escalators going down.

While, in general, not-for-profit industry funds have performed better than retail master trusts, almost all funds have lost money.

Already, the worst ranked super funds in the latest Superratings survey have lost more than 11 per cent, after just nine months of the financial year.

Others have lost more than 10 per cent of their members' money since January 1.

"Those funds are heavily exposed to the share markets both Australian and international,'' Superratings researcher Jason Clarke said.

Which also means if global fortunes change: "they can bounce back quickly'', Mr Clarke said. But as we head towards the end of the financial year, the turmoil in the investment markets is continuing.

Some funds have never delivered a negative return in their history before now, Mr Clarke said.

"For the first time since financial year 2002, there will be widespread double digit negative returns,'' he said.

"The big differences between now and 2002 is that the news will be worse for many more people this time around.''

Another issue for members will be how funds report annual performance in the upcoming reporting season. Most annual reports will be subject to increased regulator and investor scrutiny this year.

The Minister for Superannuation and Corporate Law, Senator Nick Sherry, has told funds privately, at conferences and through the media that he and the regulators are watching super funds in the lead up to June 30.

Ensuring funds report accurately and over standard timeframes and that they have the cash to pay out all rollovers are the main issues highlighted by the minister.

"I think the issues for superannuation funds will fall into two broad areas,'' Senator Sherry said recently.

"Trustees governance, particularly the liquidity issue when we have negative rates of return, as they're likely to be and, secondly, in terms of disclosure how negative rates of return are reported to fund members.

"Even though there's three months to go until the end of the financial year, I'm advised by most funds that it's highly likely we'll see more widespread negative rates of return than we've seen before,'' the minister said.

"And how that is reported and how that's oversighted by APRA, the industry regulator, will be important given probably the most widespread negative rates of return since 1987 when superannuation became compulsory.''

In the past, funds, particularly industry funds, "smoothed out'' bad results by drawing down cash reserves, Mr Clarke said.

"I think the days of reserving to smooth results is pretty much over,'' he said.

"It was widespread up until the last downturn in results in 2002 but since then it hasn't been needed much.

"There is also much better transparency now because of investment choice.''

Industry Super Network executive manager David Whiteley said giant amalgamated super funds were now too big to smooth their results.

"Reserves haven't increased at the same rate as funds under management,'' Mr Whiteley said.

"I don't think funds can make much of a tangible difference by smoothing and it's not as if returns are going to be 0.1 or 0.2 per cent down. A few might try it but I doubt it.''

The squeeze is on

Fund (Balanced)     Past 3mths %               Year to date %

AGEST                         - 5.55                               - 3.43
AMP                              - 9.10                               - 7.66
AustralianSuper         - 7.80                               - 5.10
BT Lifetime Super       - 8.93                              - 11.07
CARE                              - 6.36                              - 3.57
Cbus Core                    - 6.49                               - 4.33
Colonial                         - 6.78                               - 6.68
FirstState                       - 7.40                               - 5.80
Equipsuper                   - 6.41                               - 4.72
HOSTPLUS                   -5.97                                -2.16
ING Corp                        -8.97                                NA
JUST                               -6.18                                -4.30
LeggMason corp          -11.86                              NA
LUCRF                            -7.32                               -4.60
MLC Horizon 4               -6.95                               -6.00
MTAA                                -5.24                               -1.70
REST                               - 4.58                               -2.88
TWUSuper                      -5.76                                -5.11
UniSuper                          -6.65                               -4.91