Big-name funds lag the market

In contrast, higher-cost retail super funds, including some operated by the big banks, have delivered some of the worst investment returns in the past five years, according to a comprehensive snapshot of the nation's $1300 billion super industry.

The figures, compiled by the Australian Prudential Regulation Authority, come amid the federal government's review of the industry. The inquiry, headed by Jeremy Cooper, is examining measures to push down member fees and improve returns. The figures, which track Australia's 200 largest funds by asset size, show the average annual rate of return for super funds was 3.4 per cent in the five years to last June. Average returns in the past three years were 2.3 per cent.

In-house corporate funds were the best performers, delivering average returns of 4.2 per cent. Public sector funds, such as those run on behalf of local councils or public servants, were a close second with average returns of 4 per cent over the five years.

Industry super funds in general performed in line with overall fund returns of 3.4 per cent.

Retail funds, which include schemes operated by AMP, Commonwealth Bank and Westpac, underperformed, delivering average returns of 2.4 per cent. The figures show $282 billion worth of super savings are tied up in funds that have delivered below-average returns over five years.

The APRA results allow consumers to track the performance of their fund against the industry. Until the authority first released the data last year, performance rankings did not compare industry funds against private sector retail funds.

But key industry players have warned that the figures are not an accurate guide to performance, since they represent the returns across a super fund's entire range of products, rather than individual options.

Topping the returns over five years was the staff super fund of the investment bank Goldman Sachs JBWere, which delivered annualised returns of 9.6 per cent. Others include the $5.7 billion Australia Post Superannuation Scheme with 6.2 per cent, and the $23 billion university-focused UniSuper with 5.7 per cent.

Poor performers include Pinnacle Superannuation Fund with returns of minus 0.4 per cent. Tower Superannuation Fund returned only 0.9 per cent, and the Aviva-managed PremiumChoice only 0.4 per cent.

In general retail funds are better performers during market downturns, while a number of big industry funds have long-term holdings of commercial property and infrastructure, an asset class that was among the hardest hit in the financial crisis.