A number of underperforming super options have been axed by Perpetual.
Perpetual has terminated its Geared High Growth option, Geared Australian Share option and its Capital Guarantee option for Perpetual Select Super members.
Members were notified that from 21 October 2020 these options would be terminated, with Perpetual ceasing accepting new members into the options as well as withdrawal and switch requests from 14 September 2020.
"After a comprehensive review, we've determined that it is in the best interests of members to ceased offering and terminate the above investments options as there has been a low level of interest from members in these types of investments," Perpetual told members.
|Sponsored by BlackRock|
Looking to build resilience into your portfolio?
"As we approach the termination date, to facilitate the termination process we may increase our cash allocation in the geared options above the maximum cash allocation set out in the investment guidelines in the PDS as we sell out of the underlying funds."
Members will be automatically switched into other options with similar asset allocations and investment objectives. However, the successor options for the geared funds do not use borrowing as part of their investment strategy.
Those in Geared High Growth will be switched to Perpetual's High Growth option, those in Geared Australian Share will go to Australian Share and those in the Capital Guarantee option will be switched to Perpetual's cash investment option.
In 2019, Rainmaker research showed geared super options enjoyed a bumper year of returns in excess of 50%.
However, Perpetual's Geared High Growth fund shows five-year returns of 6.8% per annum and one-year returns of -4.6% per annum as of 31 August 2020.
The Geared Australian Share fund had one-year returns of -32.2% and five-year returns of 0.82% as of the end of August.
The Capital Guarantee option had one-year returns of -0.39% and five-year returns of -0.11%.
Perpetual also recently terminated its MySuper option due to underperformance, with members transferred to CareSuper.