Top things you wanted to know from our Annual Member Meeting

We know not everyone could attend our first Annual Member Meeting, so we’ve put together the top question and answers from the day. If you want to watch the full recording of the meeting or read the minutes, they’ll both be available on our website towards the end of December 2020. We'll add the link here when it's ready.

1. How has COVID-19 impacted my account and investment performance?

Like many organisations, we were not immune to the impact of the COVID-19 pandemic.  

As an investor in financial markets, we enjoyed strong investment returns prior to the onset of the pandemic.  On the 20th of February our MySuper Balanced option had a financial year to date return of 8%. By the 23rd of March, just four and a half weeks later, that year to date return had fallen to negative 10.4%. The Balanced option then went on to recover and by 30 June had a financial year return of negative 0.91%.

Pleasingly, as of November 20th, with the rebound of markets, the Balanced option has returned 7.1% on a year to date basis for this financial year.

To learn more about COVID-19 visit our knowledge hub.

2. Why did LUCRF Super not perform among the top 10 performance super funds for the last 10 years and what can we expect from future investment performance?

Both our CEO Charlie Donnelly and CIO Leigh Gavin discussed this point in their presentations.

In summary, they said it’s fair to say that we took less risk in our MySuper Balanced option than some of our peers over the last 10 years. To provide more context, our International Shares portfolio has returned 12.8% p.a. over the last 10 years. With the benefit of hindsight, it would have been preferable to have as much as possible in International Shares over the last 10 years. But we wouldn’t invest the bulk of your MySuper Balanced portfolio in just one asset class, like International Shares, as that would be inappropriate from a risk perspective. We also don’t get to invest with perfect hindsight. It’s also worth remembering in the previous decade, International Shares returned minus 2% p.a. for the decade from 2000 to 2010.  

In 2012/13, our Strategic Asset Allocation (SAA) to International Shares was 21% and our total SAA to all shares (i.e. Australian plus International Shares) was 45%. In that same financial year, many of our peers had a SAA to shares of 50%, 55% or in some cases even 60%. 

Our MySuper Balanced option has outperformed its return objective, which was CPI + 4% for most of that decade. But clearly when one major asset class returns 12.8% p.a., the more you have in that asset class, the higher your returns. We had less in International Shares and less shares in general than some of our peers, but still managed to achieve our return objective whilst taking less risk. 

The other major factor has been infrastructure. Our infrastructure portfolio has returned 11.7% over the last 10 years. But unfortunately, our SAA to this asset class was only 4% for most of the last decade, which is well below many of our peer funds, who have a 10 to 15% SAA to unlisted infrastructure, which has performed very well for most funds.

There’s now been a concerted effort in the last four to five years to increase this allocation, but it’s not the type of asset class we can buy overnight. This is because it’s an unlisted asset class, that is, an asset that’s not listed on an exchange such as roads, airports or shopping centres. Therefore we need to find high quality managers and then they need to find high quality additional assets to buy, which takes time. The allocation to that asset class inside our MySuper Balanced option is now around 8.5 to 9%. 

We feel confident about the return prospects of your portfolio over the next 10 years, but we certainly acknowledge over the last 10 years that returns could have been higher had we taken more risk. 

To see how we’ve performed over the first half of the financial year to date, you can watch our CIO Leigh Gavin’s update below.

3. Can you explain more about your fees and costs?

Several members asked questions relating to our fees, some expressed that they felt their fees were high, others wanted to know more about the kinds of fees associated with their accounts.

We don’t believe our fees are high. In fact, according to independent ratings authority, SuperRatings, our fees are lower than the industry average across all assessed account balances. Small, medium and large account balances all received a rating of excellent for fees and charges.

You can compare using the table below;

total fees for an accumulation balanced option per year 1
(Based on a $50,000 account balance)
LUCRF Super Balanced Optionaverage industry super fund balanced optionaverage retail super fund balanced option
$497 p.a.
$505 p.a.
$803 p.a.
The LUCRF Super Balanced option is $497 (gross of tax) over a one-year period which reduces to $443 (net of tax).

SuperRatings SMART November 2020. All total fees are reported gross of tax.

We’re committed to making sure our fees remain as low as they possibly can be for our members.

However, there are limits to how low we can make fees for members. For example, our administration fees are charged to cover the general costs of managing your super account. This includes things such as processing contributions and benefit payments, compliance costs and the costs involved in offering various products and services to members (such as digital tools, advice and education). By offering even lower fees, this may mean that some of these products and services could no longer be offered to members.  

Over recent years, we’ve worked hard to reduce fees.  In 2017, we reduced our variable administration fee. In 2019 we introduced a cap on fees for members with a balance in excess of $275,000 and we supported the legislative changes that meant that fees on accounts with a low balance would not exceed 3%. 

Over that same period, we’ve also reduced our Investment Fees from 0.32% in October 2017 to 0.25% in October 2020. We’ve also reduced the indirect cost ratio on our investments, which is not a fee that you pay and it comes out of your account, but it represents fees and costs incurred by our investment managers in managing your investments, before we allocate net returns to your account.  That indirect cost ratio has reduced from 0.43% in October 2017 to 0.30% in October 2020.  

You can see a comprehensive list of all our fees here.

4. Why does the app and Members Online not always work?

We regularly review and update our digital platforms to provide the best possible access for you. Last month we had over 39,000 successful logins in the app from over 17,000 members.

We’ve recently upgraded our mobile app to include biometric login (face and fingerprint recognition) for extra security and convenience. Unfortunately, this meant many of you had trouble logging in for the first time since the upgrade, and for some members the only solution was to remove and re-install the mobile app to your phone.

If you experience any problems with our app we urge you to let us know so we can work on it.

SuperRatings SMART November 2020. All total fees are reported gross of tax.

Past investment performance is not a reliable indicator of future investment performance.

All figures correct as at date of publication (9 Dec 2020)

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