Super’s underperformers just get bigger

SUPERANNUATION funds that are underperforming are getting bigger and fatter, according to the latest analysis of Australia’s “fat cat” fund managers.

AMP dominates as the biggest fat cat fund manager and although, overall, the number of these funds are falling, in AMP’s case they are increasing.

The Commonwealth Bank also increased its ranking, from fourth to third biggest fat cat this year.

According to the fifth annual analysis by investment services provider Stockspot, there were 521 fat cat funds at June this year, compared with 638 last year.

The research into more than 4000 funds defines a fat cat as a fund underperforming its peer group by more than 10 per cent during the past one, three and five-year periods.

Most fat cat funds also charge higher fees than the average.

Ranked by the number of fat cat funds, ANZ topped the list with 218, followed by AMP at 87, the CBA at 47, Westpac at 41 and Zurich at 19.

However, when ranked by the amount of customers’ money in the funds, AMP dominated with $12.9 billion, followed by Westpac at $5.6 billion and ANZ at $4.8 billion.

Despite Stockpot’s scrutiny of underperforming and overcharging fund managers, more money continues to pour in.

In the past financial year, there was $26.5 billion being managed by the top five fat cat managers, compared with $20.4 million the previous year.

Across all 521 fat cat funds, however, the amount of money has fallen from $59.4 billion to $45.6 billion this year.

For younger workers, fat cat funds could cost them more than $300,000 by retirement age, while for older, more-conservative fund members, the higher fees are eating up almost 50 per cent of their investment earnings each year, the group says

Stockspot has also named the country’s best performing funds. Those consistently earning 10 per cent more than their peers, after fees, included Platinum Asset Management, Legg Mason, Ausbil, Investors Mutual and Fiducian Group.