Trustees urged to be vigilant over fees

Superannuation fund trustees are being urged to pay greater attention to the value fund managers appointed to manage their funds are providing.

Deloitte partner, Stephen Huppert, said the latest Deloitte Actuaries and Consultants' survey of investment performance of six major implemented asset consultants, highlighted the need for trustees to be vigilant of their fund managers' performances.

The survey found that over the five years much of the overall added value provided by fund managers was eroded by fees.

"The results show just how hard it is to beat the market," he said.

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"When we compared returns to a passive benchmark, half of the active managers did not appear to add any value. And for those that did exceed the benchmark much of the added value would have been eroded through the higher fees paid for active management.

"Trustees must be vigilant. Appointing a firm to look after assets does not abrogate the trustee's duty to monitor performance and to understand what is being done well, and what can be improved - and to act accordingly."

Huppert said the evolution of the super industry had increased competition in the investment services sector that could provide trustees with the opportunity to push costs down.

"Industry consolidation is increasing the buying power of funds and it makes sense to exercise that power in negotiating fees substantially lower than rack rates," he said. 

"Individuals should also shop around and put more detailed monitoring regimes in place."