With a huge array of government initiatives reshaping super in recent years, none was more keenly watched than the inaugural performance test of 80 MySuper products.

The regulator found that 13 of the 80 products assessed were deemed to have underperformed the benchmark by more than 50 basis points. Since August when the results were released, 77% of these providers have announced their intentions to either merge or exit the industry.

This year, we expect to see the second round of MySuper results likely causing some MySuper solutions to be prevented from accepting new members. This will be accompanied by the first assessment of Choice options under the test. SuperRatings has conducted analysis of the industry’s performance to 31 March 2022, using its newly developed Performance Test iQ tool. Analysis was completed on over 650 options across Trustee Directed Products, including Retail, Industry, Corporate, and Government funds, excluding MySuper products.

The results from our analysis suggest that approximately 20% of options were estimated to fail the test, which allows for annualised underperformance of the benchmark of up to 50 basis points.

Option Type % Estimated to Fail
Capital Stable (20-40) 25%
Conservative Balanced (41-59) 20%
Balanced (60-76) 17%
Growth (77-90) 16%
High Growth (91-100) 26%

Breaking down the analysis further, SuperRatings found that all option types are facing challenges. In particular, options with growth assets, such as equities, making up between 91-100% of assets held were most likely to fail the test, with 26% of these options estimated as failing based on performance over the 8 years to 31 March 2022. Capital Stable options with between 20-40% growth assets are also facing a challenge to pass the test, with around a quarter of these options estimated as failing.

As the performance test captures investment returns over an eight-year period, funds have limited ability to shift their relative long-term position against the benchmark. However, with the test only accounting for the most recent level of fees charged, funds do have the ability to make fee changes to improve their performance test outcomes.

SuperRatings has been tracking an estimate of the benchmark representative administration fees and expenses (RAFE) based on the performance test calculation. While the test appears to be having an impact in terms of reducing fees for the MySuper products which were tested last year, our analysis shows that the Trustee Directed Product RAFE has remained flat.


We observed a decline in the RAFE for MySuper products each quarter since the start of the financial year, however the Trustee Directed Product RAFE saw an increase in the September quarter, followed by a return to the same RAFE in December 2021 and has remained stable since.

Since the results of the first test were published, we have observed an increase in funds seeking to simplify their investment menus, as well as a faster pace of merger announcements and shorter times for mergers to reach completion. While there are clear cost savings for funds in managing fewer options, the benefits of member choice are real, with highly engaged members particularly valuing additional choice. We suggest funds take a balanced approach when assessing the viability of offering additional options to ensure members achieve the best possible retirement outcomes.

The first performance test has had a significant impact on the future of those products which failed. Having an industry wide benchmark gives funds a clear target with significant potential benefit for members, however ensuring the test is appropriately capturing the nuances of the range of investment options in the industry remains a challenge. The regulator will be releasing the results of its second annual performance test later this year, with the industry closely monitoring potential outcomes. As the industry awaits the results of the second test, SuperRatings continues to use its comprehensive database and deep research capability to gain key insights into super fund performance and the future outlook for the industry.

With the passing of the government’s Retirement Income Covenant legislation, funds now have a clear framework and timeline to guide their path forwards.

As we expect the number of retirement income products in the market to grow, it is crucial for funds to ensure they are appropriately resourcing education, advice and digital capabilities to support retirees in understanding, planning and managing their retirement strategies.

Camille Schmidt, Market Insights Manager, SuperRatings

With the regulator set to release the results of its assessment of performance for Trustee Directed Products for the period to 30 June 2022, we have estimated the potential outcomes for diversified Choice options using our new Performance Test iQ analysis tool for the 8-year period to 31 March 2022.

The results indicate that approximately 20% of options were estimated to fail the test, which allows for annualised underperformance of the benchmark of up to 50 basis points.

Kirby Rappell, Executive Director, SuperRatings

We support the steps APRA is taking to improve data collection, reporting and transparency around superannuation products across the industry. However, we note that data collection is onerous for the industry and therefore do not propose any further metrics to be obtained from providers. We believe the greatest value would be achieved through further refinement of the data being collected, with standardisation and improved consistency, where possible, supporting usability. A summary of our responses to key areas requested by APRA is below.

We note that there is still very good reason for segmenting funds based on their fund type due to differences in their ownership structures and product offerings which flow down into impacts that will be seen in service provider agreements, fee structures and insurance arrangements.

We support the proposal to apply a representative member balance and believe a $100,000 account balance is reasonable as this is reflective of the average member balance observed.

In our experience we have found that Sharpe ratios are not broadly understood, especially amongst consumers, and are of limited usefulness if not considered alongside other risk metrics, due to their known shortcomings, particularly the inability to account for volatility of unlisted assets. Furthermore, disclosure of multiple performance measures which seek to describe similar underlying constructs, is likely to cause confusion among users of the data and particularly members if they view this information.

We note the challenges of determining growth asset proportions across the industry due to inconsistencies in classification approaches, particularly for unlisted property and infrastructure assets. We believe there is room for improvement here and that a consistent approach is needed for meaningful comparisons to be undertaken across providers. As a result, the computation and interpretation of growth asset proportions across the industry remains a challenging area. Therefore, the introduction of growth asset categories is likely to create further complexity and confusion given there are already a number of bands being communicated, including our own method.

We are unsure of the purpose of computing the difference in premiums paid by members versus premiums paid to insurers. If the goal is to understand the cost of insurance administration, there are more suitable methods to utilise. We note that there are likely to be several reasons for there to be a non-zero difference between premiums collected and remitted. These include timing differences, differences in accounting practices and factors inherent to benefit design.

One possible objection to the publication of default insurance cover and cost is that products and costs are not always directly comparable from fund to fund. Nevertheless, we do see some value in publishing the default product details for each fund to the extent that these are by definition the terms that will apply to members who make no active decision regarding their insurance cover.

We initially developed our tests of tomorrow following the Royal Commission to gain insight into the areas which may be focused on, should such an industry overhaul occur again, and we have continued to review and adjust these over time. Our suite of tests includes inactive account transfers, disclosure of fees, insurance and investment risk, legacy products, how well scale is being leveraged and retirement product development.

Kirby Rappell, Executive Director, SuperRatings 


With stapling reducing the flow of members defaulted into employer plans, funds need to focus on their acquisition strategies in this new environment and the channels through which to obtain members including corporates, direct acquisition and external advisers. 


Fees and investments continue to be key hygiene factors when selecting a default fund, we are seeing corporates adopt a more values-based overlay to their decision-making.


Camille Schmidt, Market Insights Manager, SuperRatings

With the stapling changes taking effect from November 1 this year, the complete picture will take some time to emerge. We believe it is well intended to stop the proliferation of accounts, though we will see changes in terms of the profile of member accounts among funds going forwards.

Funds should consider how to engage with employers in relation to the changes and will need to emphasise the value of superannuation as an employee benefit, with the future of tailored employment arrangements unclear. We also expect meaningful engagement with a disengaged member base to be challenging.

Camille Schmidt: Market Insights Manager, SuperRatings

Following a rigorous review of 530 major superannuation products SuperRatings 2022 ratings have been finalised. Some of the key themes we are interested in this year include how well funds are harnessing their scale and how are funds able to measure the benefits of member engagement.

Kirby Rappell, Executive Director, SuperRatings

Across the financial services industry there are a number of key themes that are ongoing and emerging, including regulatory and legislative change, challenges of a pandemic environment, distribution channels and the rising focus on ESG and sustainability considerations.

In this panel session we will discuss the strategic considerations associated with the rising adoption of net zero by 2050 commitments by asset owners and investment managers. The challenges will be discussed by leading super funds and investors and they will share their thoughts on how our industry can progress towards this target.

Lonsec hosted this panel as part of the Fund of the Year Awards 2021.

Issued by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Warning: Past performance is not a reliable indicator of future performance. Any advice is General Advice without considering the objectives, financial situation and needs of any person. Before making a decision read the PDS and consider your financial circumstances or seek personal advice. Disclaimer: Lonsec gives no warranty of accuracy or completeness of information in this document, which is compiled from information from public and third-party sources. Opinions are reasonably held by Lonsec at compilation. Lonsec assumes no obligation to update this document after publication. Except for liability which can’t be excluded, Lonsec, its directors, officers, employees and agents disclaim all liability for any error, inaccuracy, misstatement or omission, or any loss suffered through relying on the document or any information. ©2021 Lonsec. All rights reserved. This report may also contain third party material that is subject to copyright. To the extent that copyright subsists in a third party it remains with the original owner and permission may be required to reuse the material. Any unauthorised reproduction of this information is prohibited. 

Lonsec and SuperRatings have announced the winners of this year’s Fund of the Year Awards, which were held virtually for the second year in a row.

The Lonsec Manager of the Year was awarded to First Sentier Investors in recognition of their strong investment approach right across their suite of products.

“First Sentier Investors has a strong track record, not just in performance, but also driving positive change with their investment products, having integrated ESG across their business.” said Lonsec Research Executive Director, Lorraine Robinson.

“Congratulations to First Sentier Investors and all the other winners and nominees in this year’s awards.”

First Sentier Investors CEO, Mark Steinberg, commented “First Sentier Investors has always had a focus on delivering sustainable long-term outcomes for our clients. We are very proud to receive this award as recognition of that commitment.”

The SuperRatings Fund of the Year went to UniSuper, recognising their strong assessments across the main judging categories, with strong performance, competitive fees and an ongoing focus on members.

“UniSuper has continued to deliver strong net benefit outcomes over the past twelve months, due to competitive fees and strong performance. Coupled with a clear focus on supporting and servicing members, with a range of advice services embedded into their offering, UniSuper demonstrates the benefit of consistent excellence across all aspects of their offering.”

“It is an honour to continue to recognise the best in the superannuation sector and award those funds who, in the last year, have helped their members to navigate a very difficult time.” said SuperRatings Executive Director, Kirby Rappell.

UniSuper CEO, Peter Chun, said “We’re so proud to have won SuperRatings Fund of the Year award. UniSuper is committed to delivering greater retirement outcomes for our members so it’s an honour to be recognised for offering the very best in investment performance, value, and member services, especially now we can welcome all Australians to our fund.”

Full List of Winners


Lonsec Manager of the Year

First Sentier Investors


Lonsec Multi-Asset Fund of the Year

BlackRock Tactical Growth Fund


Lonsec Active Equity Fund of the Year

Hyperion Australian Growth Companies Fund


Lonsec Passive Fund of the Year

VanEck MSCI International Quality ETF – ASX: QUAL


Lonsec Active Fixed Income Fund of the Year

Pendal Short Term Income Securities Fund


Lonsec Property and Infrastructure Fund of the Year

Australian Unity Healthcare Property Trust


Lonsec Alternatives Fund of the Year

Partners Group Global Value Fund


Lonsec Emerging Manager of the Year

Sage Capital


Lonsec Innovation Award

Robeco SDG Credit Income Fund (AUD Hedged) – Class B


SuperRatings Fund of the Year Award



SuperRatings MySuper of the Year 



SuperRatings MyChoice Super of the Year



SuperRatings Pension of the Year



SuperRatings Career Fund of the Year 



SuperRatings Momentum Award



SuperRatings Net Benefit Award

AustralianSuper + HESTA


SuperRatings Smooth Ride Award



SuperRatings Infinity Award

Australian Ethical Super


Release ends
For more information, contact:
Rob Hardy
1300 826 395

Important information: Any express or implied rating or advice is limited to general advice, it doesn’t consider any personal needs, goals or objectives.  Before making any decision about financial products, consider whether it is personally appropriate for you in light of your personal circumstances. Obtain and consider the Product Disclosure Statement for each financial product and seek professional personal advice before making any decisions regarding a financial product.