The Your Future, Your Super (YFYS) performance test is a new test recently introduced by the Federal government and conducted by APRA, the prudential regulator for super fund products. It’s the first time this has been done, and it compares fund performance over seven-years to 30 June 2021, against a benchmark determined for the Fund’s MySuper product. It takes into account administration fees for last financial year.
The test doesn’t apply to any of the Choice investment options, that is other investment options apart from MySuper investment options. Only 76 investment options from 1,674 APRA-regulated funds were assessed. Meaning the test measures a specific investment option, not the entire fund. Each fund has several investment options available.
You can view the investment returns for all our non-MySuper investment options on our website.
The annual performance test considers two key parts of the product:
- Performance - net investment returns for the last seven financial years, which are annualised investment returns less investment fees and taxes, versus a benchmark determined for the Fund’s MySuper product
- Fees –administration fees which are calculated based on what was charged last financial Year
The investment returns benchmark is based on a product’s strategic asset allocation, i.e. the percentage of the product the fund allocated to different asset classes, like shares, property, infrastructure, etc. This means that each MySuper product is measured against a different benchmark.
This test measures against the strategic asset allocation and not the actual asset allocation. The strategic asset allocation is what asset classes the product aims to invest in and in what amounts, however it may not be the actual asset allocation, which is what is currently invested in as it takes time to buy and sell in some asset classes.
For example, many funds invest in infrastructure (i.e. airports, hospitals, rail), however, they often need to wait for these assets to be available to invest in, which means achieving the strategic asset allocation can be delayed.
Because the performance is assessed based on strategic asset allocation, there are funds with lower 7-year net returns that passed the test, and funds with higher 7-year net returns that failed the test. So a MySuper product that has a more conservative strategic asset allocation could do better under the test than a more growth oriented MySuper product that achieved a higher rate of return.
Our super fund performance
For the test, only FY21 administration fees have been applied across all 7 years of test – so funds that reduced fees in FY21 have benefited, when in fact they had higher fees in previous years. This is consistent with the Government’s intent to motivate funds to continue to reduce their fees.
The ATO Fund Comparison tool, measures past performance and doesn’t consider products that have changed their investment processes, structures, or fees and the time to implement these changes. This means that positive changes made over the 7 years may not be reflected in the test because of the time it took to implement them and then see the expected benefits.
It’s important to review and understand the results of the test so you can make an informed decision when considering switching products.
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