The Stupidity of Performance Tables - Industry Funds Vs The Rest
The Industry Superannuation Funds have been crowing for years about how much better they are from their opposition, the retail funds. More recent results show this position reversed and have Master Trusts leading the pack. So who is the best? Well that depends of course on who you compare yourself with and the period you want to compare.
These performance figures are nonsense. The most commonly compared fund is a so-called Balanced Fund. No two balanced funds are the same, having differing asset allocations and strategies and that is going to give you a different result no matter how good or bad the manager is.
The following illustrates the stupidity. The MTAA Fund was lauded as the top performing fund just a year ago. This year they are at the bottom. Why? Most funds have an allocation to property. With most retail funds, this allocation is via property securities, which are property trusts listed on the stock exchange and these are valued daily like shares. Most Industry funds have significant direct property holdings which are only valued when the funds decides to do so. As the stockmarket fell so did property trusts. Direct property didn’t fall because the fund initially chose not to revalue, obviously fearing the worst. MTAA finally bit the bullet and revalued and went from the penthouse to the basement in one go.
Now, as direct property values continue to fall back to realistic levels, those with unlisted property are now under-performing as the listed property market rises resulting in Master Trusts outperforming their industry counterparts. It’s all a bit silly isn’t it?
Performance is a long-term thing and should only be measured that way. Unfortunately, all industry participants use these figures as a marketing tool. Don’t fall into the trap that any one fund is “the best”. Sure, it might be today but to quote Scarlett O’Hara, “… tomorrow is another day”.
POSTED: 24-Sep-2009