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Financial Happenings Blog
Sunday, April 01 2007

There was an interesting article in today's Courier Mail about HESTA, an industry superannuation fund.  There has been a lot of marketing by industry superannuation funds lately - Sunsuper, HESTA, the construction industry super fund and so on.  As a supporter of industry superannuation funds, this is a bit of a concern.  The last thing that we want to be seeing is industry superannuation funds behaving like retail superannuation funds - and starting to charge fees accordingly.

HESTA use the headline rate of fees of '$1.25 a week'.  They fail to mention that as well as this there is a investment management fee, plus they have started to charge a 'performance bonus' fee.  Not very industry superannuation fund like.

It is interesting to see that HESTA say that most of their clients have a balance of less than $20,000.  This is an interesting part of the equation.  This, to my mind, is the folks for who an industry superannuation fund is ideal for - people starting to accumulate some superannuation wealth.  They don't have to worry about high fees eroding their superannuation returns - as often happens with retail superannuation products.

Our benchmark for total superannuation fees is 1.5%.  Industry superannuation funds tend to be cheaper than this, retail funds less expensive.  Costs do matter in investing, and industry superannuation funds still have a cost advantage.  Let's hope that they don't spend so much money advertising this advantage that they have to raise their fees!



Posted by: Scott Francis AT 09:24 pm   |  Permalink   |  Email
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