July marked the 25th anniversary of the superannuation guarantee but it also signified other important milestones for the maturing $2.3 trillion super system.
There is now three years of APRA MySuper data, meaning researchers have far more to work with when it comes to analysing MySuper product performance. Complementing this was the final transition of all workplace default members to a MySuper account.
Excluding self-managed super funds, MySuper now accounts for more than 40% of super assets or $595 billion. Rainmaker analysis shows there are 111 individual MySuper products offered by 94 separate superannuation funds.
In the 12 months to 30 June 2017, the top ranked MySuper single investment strategy was Hostplus with an annual return of 13%. For lifestage options, the AMP Super Directions MySuper offering was ranked number one for both members aged up to 40 years and between 41 and 49 years, posting returns of 14.4% and 13.7% respectively.
As July's deadline loomed for the MySuper transition, Rainmaker said it is not surprising that retail MySuper accounts grew in the last three years from $17 billion to $103 billion and most of this growth occurred in the past 12 months.
"MySuper are generally lower cost products. So the transfer of default accounts into lower cost products and new workplace contributions flowing into these products has created margin squeeze for many players," Rainmaker said.
The researcher added that ongoing change in the super industry has led to some innovation at the product level.
"Tasplan moved from single strategy to lifecycle, while Virgin moved from fund level to product level under Mercer. MLC has consolidated a range of products into a smaller number, and LESF has offered it's MySuper product as a white label product to a new app-based market entrant," Rainmaker said.
The researcher's analysis shows there are 31 MySuper products with a lifestage strategy, but between them a total of 237 different lifestages are offered.
It notes there has been adaption over recent years in these lifestage products. The average allocation to growth assets for lifestages 60 years plus has increased from 41% to 48% and there has been a general shift up in risk levels across all age cohorts, Rainmaker said.
Over both 12 months and the three years to June 2017, the average performance of single strategy funds matches the average performance of a lifecycle performance for someone in the 40 to 49 years age cohort at 9.9% and 7.1% respectively for both.
However this cohort is "very much the crossover point." Rainmaker said at younger ages, the higher growth orientated lifecycle offerings tend to outperform, and at older ages the more conservative lifestages underperform single strategy.