Key Takeaways
- • Australian superannuation funds that brought investment teams in-house underperformed peers that rely on outsourced managers over the past three years, according to a leading local equities research house.
- • Funds with in-house investment teams charged their members higher fees than funds using external managers.
- • The findings challenge the assumption that internalizing portfolio management lowers costs and improves returns for super fund members.
Summary
Superannuation funds that have built in-house investment teams have delivered weaker returns and higher member costs than funds that outsource portfolio management, according to research from one of the country's top equities research houses. The firm found that in-house funds lagged their outsourced-manager peers on performance over the past three years, while members of those funds paid more in fees. The report's publisher summary does not quantify the performance gap or fee differential, so the magnitude of either remains unspecified in the available coverage. The findings bear on a long-running debate in Australian retirement savings about whether bringing investment management in-house reduces costs and improves outcomes for members.
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