Wealth advice platform and social enterprise Super Fierce has launched Australia’s first index to capture 99.8% of the entire market, based on 2,069 investment options across 359 superannuation funds.
The Super Fierce “Fierce Performers Index” (FPI) is also the only index to accurately measure not just performance, but also consistency of performance across multiple market cycles and across multiple investment options.
This is compared to other options which are often biased due to involving a “pay-to-play” component (the funds sponsor the research in some way), are not designed for Australian consumers, only cover one investment option in each fund, and suffer from recency bias due to a limited time period selection process.
As an example, ratings agency rankings suffer from recency bias and, worse still, are also often incomplete and biased due to funds having to pay to be included. The Your Future, Your Super (YFYS) comparison tool also has many current perceived weaknesses which are addressed by the FPI, which:
- analyses performance of various time periods since 2003, not just YFYS’s single period of eight years ending at the most recent financial year end, which can skew results if markets have recently been particularly bullish or bearish;
- looks at consistency of performance across different risk options and for lifecycle and sustainable investing options;
- adjusts for the differences in strategic asset allocation (market risk) across funds, rather than relying upon the funds’ inconsistent self-classifications;
- adjusts for biases by measuring performance in good, average, and bad market conditions,
- reduces the risk that “past performance is not indicative of future performance” by measuring consistency year after year and across all investment options;
- assesses resilience of relative performance by looking for funds that are persistently above 50th percentile year-by-year; and
- includes all fees on a consistent basis, addressing the criticisms about YFYS’s handling of administration fees.
This makes the FPI Australia’s first ever non-biased, comprehensive, and highly accurate mathematical analysis and reporting of super fund performance helping Australians maximise their retirement savings.
Trenna Probert (pictured), Super Fierce Founder and CEO said, “Identifying the highest-performing superannuation fund through basic comparisons is a daunting and complicated task for the average Australian consumer.
“We created the Fierce Performers Index to provide all Australians with an affordable way to find and select a super fund that will suit their individual needs, leaving them substantially better off in retirement.
“Rankings, ratings, and the multitude of other sources of information are difficult to find and understand, and they are of course not tailored to an individual’s circumstances or preferences. With the current state of the financial advice industry further exacerbating this, we knew Australians needed a better way to select the right fund for them.”
Craig Swanger (pictured), Super Fierce Co-Founder said, “APRA’s Your Future, Your Super does what it is meant to do by highlighting the poorest performing super funds. But it was never designed for everyday Australians looking for guidance on choosing a fund that is likely to perform well in the future.
“This is because, to date, we haven’t had any proof that historical performance can reliably predict future performance. But our data has uncovered that past outperformance can be a predictor of future performance – so long as you analyse a fund’s performance across multiple market cycles and investment options.”
Image and article originally from australianfintech.com.au. Read the original article here.