ANZ wins Fat Cat super fund gong once again

Mike Smith left ANZ at the turn of the year. The bank’s share price deflated 6 per cent during his time at the helm. The centrepiece of his corporate strategy, expansion into Asia, is now unwinding.

Though he was still paid almost $90 million for his eight year stint. Not bad for a taxpayer-backed job. The banks are underpinned by the Reserve Bank’s Committed Liquidity Facility, effectively a bail-out fund to prop them up if they get into strife.

In light therefore of the lavish remuneration and low risk enjoyed by the country’s big bankers it is galling that ANZ seems to have done nothing to unwind its bevy of poorly performing, high-fee super funds. Unwitting customers are stuck in these things, while ANZ executives live high on the hog.

Once again we unveil Stockspot’s Fat Cat Funds Report, which this year analysed a record 3,820 funds. It is worth looking at this report. It is the best, most independent analysis of fund performance in Australia. You can find it at www.stockspot.com.au.

Once again, ANZ takes the gong for the worst operator. This is not to say that all of ANZ’s funds are shockers, some perform well, but the bank’s OnePath investment platform boasted 239 “Fat Cat Funds” which ripped out a heady $142.5 million in fees.

Next worst performer was AMP/AXA, followed by Westpac (BT). National Australia was the best performer in terms of the lowest number of Fat Cat funds (32), followed by Commbank (Colonial) with 50 Fat Cat funds.

The best performers overall, in terms of Fit Cat funds, were Investors Mutual, followed by SG Hiscock and Rest Industry Super.

Stockspot analysed funds with a combined $587 billion under management, on which $6.5 billion was charged in fees. Total fees in the trillion-dollar sector are now almost $24 billion. It is Australia’s largest gravy train.

The Fat Cat funds were those whose performance was worst and fees highest. For those who have savings in these funds, some 28 per cent is lost in fees, compared with 12 per cent for those in the Fit Cat category. Fees make a huge differnce, literally hundreds of thousands of dollars, to a superannuant’s retirement savings.

The Fat Cat funds averaged a little over 2 per cent in fee-take. It doesn’t sound much but makes an enormous difference to the returns to savers.

Again this year, industry super funds performed better than retail (mostly big bank-operated) funds. Retail had twice as many Fat Cat funds.

The difference in performance, as usual, mostly came down to how much was charged in fees.

“The average 30 year old in a Fat Cat Fund can expect to lose nearly a quarter (24 per cent) of their super savings in fees,” says the report, a quarter of a million dollars for being stuck in a high-fee fund.

Video: Charles Firth monsters ANZ, AMP and Westpac with Fat Cat awards