The APRA stats, while not overly useful, do seem to show that the industry funds are not performing much worse (if in fact they are worst) than retail / corporate funds. Although the devil is in the detail.

The APRA figures are in my view very misleading if you try to draw conclusions about the performance of one product sector over another. One needs to compare specific investment options not the overall movement in funds under management.

Consider this analogy:
Into a bucket I put some grains of sand, some river stones, some rocks and some boulders and then tell you the average weight of items in the bucket is 126grams. Is that a meaningful statistic from which you can draw conclusions about the bucket? Not at all.

The closest thing to a proper comparison between product sectors is when they compare the performance of all the ‘balanced’ investment options. (They use ‘balanced’ since it is the most common option.) But that performance statistic is also error-prone as there is no single definition of ‘balanced’. The actual asset allocations of ‘balanced’ options varies widely and that materially impacts on the returns.

I agree with the use of index funds, but that has nothing to do with the APRA stats and more to do with SPIVA stat you quoted.

And I strongly caution against bringing SMSFs into this discussion about investment returns. That’s comparing the bucket to the contents of the bucket. Click here to read about why you don’t need an SMSF

“In the ten years to 30 June 2010, the average ROR for large funds was 3.3 per cent per annum. Public sector funds recorded an ROR of 4.2 per cent per annum, corporate funds 3.9 per cent per annum, industry funds 3.9 per cent per annum and retail funds recorded 2.5 per cent per annum.”

Considering the difference in fees, it would appear that industry funds have over the last ten years on average out performed retail and corporate funds.

Perhaps SMSFs (or at least indicie funds) are the answer considering that the S&P Indices vs active funds scorecard found that the benchmark out performed roughly 71% of active Australian share funds over 5 years….