APRA hits 12 super options with failed grade

The number of failed investment products nearly doubled in the 2026 APRA superannuation performance test, with BUSSQ being the only industry fund to make the list dominated by retail funds.

One MySuper product and 11 trustee-directed products (TDPs) failed out of a pool of 547 superannuation products APRA assessed. Seven products failed last year's test.

It is a first for BUSSQ's MySuper product. It is also the lone industry fund to make the failures list.

BUSSQ returned 7.04% p.a. and underperformed the benchmark by 0.57% p.a.

BUSSQ chief executive Damian Wills said the fund has taken the result seriously and has been focused on improving outcomes for members.

"We acknowledge and understand the importance of the performance test in providing transparency for members. It does not affect the security of members' savings, and our Balanced Growth MySuper product remains open to new and existing members," he said.

BUSSQ has $7.4 billion in assets with nearly $6.5 billion of this amount invested in the default strategy.

This was the only one of 50 MySuper products tested to have failed, the first failure since 2023.

Eleven out of a total of 141 TDPs failed the test. Five of these failed for at least two consecutive years.

Appearing on the list for the first time, Insignia Financial's options - MLC MultiActive High Growth and MLC MultiActive Geared that sit in three super funds offerings - failed the test. The three super funds are the IOOF Portfolio Service Superannuation Fund, Oasis Superannuation Master Trust and Retirement Portfolio Service.

"These options are specifically designed for members seeking higher growth and, as a result, have greater exposure to share markets, particularly high-growth equities. While that approach can deliver strong long-term outcomes, it may not always align perfectly with the benchmarks used in the performance test," an Insignia spokesperson said.

"While we fully support the objective of helping Australians compare superannuation products, this outcome highlights some of the limitations of applying the performance test to specialised investment options on wrap platforms."

The good news for Insignia is that its MLC Wholesale Horizon 2 Income Portfolio is now reopened to new members. The option, which sits on the Expand Essential Super and Extra Super Menu, previously clocked up two consecutive failures.

For the second consecutive year, Betashares' Bendigo Superannuation Plan's Balanced Wholesale Fund and High Growth Index Fund, failed the test.

The Bendigo Balanced Wholesale Fund returned 6.31% p.a. over a decade but underperformed by 1.09% p.a.

Betashares finalised its acquisition of Bendigo Superannuation for an undisclosed amount in 2024.

Three of AMP's options - North Guardian Balanced Fund, North Guardian Growth Fund and North Guardian Moderately Defensive Fund - also lagged their benchmarks by between 1.39% p.a. and 1.76% p.a.

"It is widely acknowledged that the test as it applies to platform products is not delivering outcomes in the best interests of Australians. The fact that capital guaranteed investments, which are achieving their clearly defined risk and return objectives, have not passed demonstrate the shortcomings," an AMP spokesperson said.

"We will continue to advocate for reforms that ensure the test achieves its objectives, including a benchmark which reflects the wider platform market."

APRA chair John Lonsdale said this year's results show pockets of underperformance remain and reinforced the need for trustees to take timely and effective action.

In addition to the test results, APRA released its inaugural Comprehensive Product Performance Package (CPPP), an analysis of the performance test results with additional measures of investment returns and fees to measure how super products are performing.

The results show administration fees have continued to decline across all product types - but platform TDPs remain materially more expensive, even before considering the costs of any personal financial advice.

The CPPP also shows platform TDPs have higher rates of underperformance over 10 years when compared against other product types.

About $1.3 trillion of retirement savings sit in MySuper options, with $473.9 billion in non-platform TDPs.

Platform TDPs represent less than 5% of the broader platform sector with $21.3 billion in assets.

"Lower administration fees can make a meaningful difference to members' retirement balances by supporting higher net returns," Lonsdale said.

"APRA expects trustees to maintain a close focus on administration fees and fund performance in the best financial interests of their fund members."

Betashares did not respond to Financial Standard's request for comments.