YFYS performance test: good intentions marred by collateral damage

The publication of APRA’s inaugural performance test results has proved confronting, not only for funds that failed the test but also for their members. Anomalies and mixed messages abound and as the lessons sink in, we’re seeing funds trying to balance the long-term interests of their members with the shorter-term focus on passing the test. While we appreciate the policy intent to remove underperforming funds, there’s some concern about the implementation.

Outcomes of the 2021 performance test

In this year’s test, APRA analysed the performance of 80 MySuper products. Each fund was assessed against a benchmark portfolio with a matching asset allocation, using broad market indices for each asset sector. Returns were measured net of tax and administration fees, using fees from the most recent financial year.

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