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An update on new ASIC regulatory guide: RG97

28 September 2017

Sunsuper’s investment returns and fees won’t change with new disclosure rules.

A new Australian Securities and Investment Commission (ASIC) regulatory guide – RG97 – specifies how super funds need to disclose fees and other costs in their product disclosure and annual statements.

From 30 September, the new regulatory guide will require all super funds, including Sunsuper, to report operational costs we incur in structuring our investment portfolios in addition to our fees.

Importantly, as we’ve always incurred these costs, the new disclosure requirements will have no impact on the total investment fees and costs members currently pay for their Sunsuper account or our strong net returns, which also won’t change.

In fact, Sunsuper’s Balanced option has outperformed both the industry and retail fund median returns over 1, 3, 5, 7 and 10 years to August 20171, and as Australia’s 2017 Fund of the Year as recognised by Chant West and Super Review2, Sunsuper remains one of the industry’s top performers.

How does RG97 impact members?

The new disclosure requirements specified under RG97 won’t affect members’ fees, super balances, or the returns on their super investments in any way. Put simply, it is a change to the way the costs associated with generating investment returns are disclosed.

What are the changes?

As a profit-for-members fund, we’re focused on keeping our administration and investment fees as low as possible. And we have always fully disclosed our administration and investment fees to members. From 30 September, the new regulatory guide will require all super funds, including Sunsuper, to report the operational costs we incur in structuring our investment portfolios in addition to fees.

For example, when we invest in unlisted assets like property, we will now be required to disclose specific costs associated with making that investment, like stamp duty, brokerage and other expenses typically associated with buying property.

Have fees changed as a result of the new guideline?

Importantly, as we’ve always incurred these costs, the new disclosure requirements will have no impact on the total fees members pay for their Sunsuper account. At first glance, our total fees, which now include these newly disclosed costs, may look like our investment fees have changed. But that’s not the case.

RG97 will primarily impact the fee disclosures for members invested in our actively managed investment options. This is because at Sunsuper we invest more heavily in unlisted, alternative assets including property and infrastructure, and carefully selected hedge funds and private equity investments.

Such investments have proven to give our members higher, less volatile returns over the long term1, but these exposures do cost more to source and manage.

The costs of these investments include various property management costs, insurance, stamp duty on purchases, and ongoing staff and maintenance costs. These costs are not charged to Sunsuper but are paid by other parties such as property and infrastructure trusts that Sunsuper invests in on members’ behalf. As these costs are paid, they are deducted from the overall asset value, which has always been reflected in the unit prices of our investment options.

Why do you invest in unlisted alternative assets?

As well as greater scope for value creation through active management, these investments allow us to access opportunities not generally available publicly. And they provide greater diversification across the total Sunsuper portfolio.

The evidence that the value of our investment philosophy around unlisted assets outweighs the cost is clearly shown in our performance. In fact, Sunsuper’s Balanced option has outperformed both the industry and retail fund median returns over 1, 3, 5, 7 and 10 years to August 20171, and as Australia’s 2017 Fund of the Year as recognised by Chant West and Super Review2, Sunsuper remains one of the industry’s top performers.

Some of the alternative assets we invested in this year include an interest in the Port of Melbourne, the acquisition of a shopping centre in Newcastle, an integrated utility business in the Slovak Republic, and specialist property investment funds in the US. We added these assets to the portfolio to enhance diversification and ensure members benefit from our ability to access alternative assets.

What if I don’t want to invest my super in alternative assets?

Sunsuper offers a wide range of investment options designed to cater for a variety of investor needs, including a broad mix of multi and single asset and actively managed and index options. Members can talk to Sunsuper about the right investment choice to meet their goals and stage of life by calling 13 11 84 and find out more about Sunsuper's investment options in our latest Sunsuper for life Investment guide.

 

1 SuperRatings Fund Crediting Rate Survey – SR50 Balanced (60-76) Index, to 31 August 2017. Returns are after investment fees and taxes but before all other fees and costs. Industry and retail fund median returns are for Not for Profit Fund and Master Trust Median returns. Past performance is not a reliable indication of future performance.

2 Check here for ratings and awards information.