From 1 July 2023, certain diversified investment options are subject to Australian Prudential Regulation Authority’s (APRA) annual performance test. The test measures the performance of these investment options against an objective, consistently applied benchmark determined by APRA. It compares the investment option’s earnings, less costs, with a benchmark over the same period. The benchmarks used in the test do not include ethical screening. It does not consider your personal situation, fees, or tax.
The test is intended to hold trustees accountable and protect members for underperformance through greater transparency. Where an investment option fails the performance test in two consecutive years, the trustee will be prohibited from accepting new members into that option.
Members invested in this option will be notified with further information. Find out more on the
APRA website.
1. What is the performance test?
Under the Your Future Your Super legislation, APRA performs an annual performance test to assess superannuation funds against fees and investment returns. The test is intended to hold funds to account for underperformance through greater transparency and increased consequences.
The test comprises an evaluation of both investment performance and administration fees. Investment performance is assessed over a period ranging from a minimum of 6 years to a maximum of 9 years. Meanwhile, the assessment of administration fees focuses on charges incurred by members with a $50,000 account balance during the previous financial year.
The investment performance assessment calculates the actual net investment return, comparing it to the return of a benchmark portfolio with a similar investment mix (known as the ‘Strategic Asset Allocation’) after deducting representative investment fees and taxes. To pass the test each product must not underperform the calculated benchmark return by -0.5% or more.
The benchmarks used in the assessment do not consider ethical, sustainability, and governance (ESG) investment objectives. Consequently, Cruelty Free Super was compared to benchmarks that lack any ethical screening criteria. Cruelty Free Super screens investments to ensure that only companies that meet our
well defined ethical investment criteria are included in the portfolio. This means that when you compare our performance to the benchmark in the performance test, you’re not comparing like for like portfolios.
This is the first year that the test has applied to “trustee directed products”, which is a sub-set of the choice product sector; the category that Cruelty Free Super fits into.
2. What happens if a fund fails the performance test?
If a fund fails the test once, they will be required to write to members to inform them that their fund has failed. If a fund fails the test two years in a row, it will be unable to accept new members.
3. What does it mean to fail the test?
It means that the fund has underperformed the calculated benchmark return by -0.5% or more.
4. What are you doing to improve performance?
We are working with the fund’s investment manager to consider solutions that best meet member needs.
Our ethical investment screening means our performance is not correlated to the benchmarks used in the performance test.
As Cruelty Free Super has been around for over a decade, we have a long performance history that does not reflect the current asset allocation of the fund. When the fund was initially established its investments were limited to Australian equities and it had a smaller membership base, resulting in lower Funds Under Management (FUM). However, as the fund has grown, we’ve been able to introduce international equities to the portfolio.
5. What benchmarks are you compared to?
| Asset class | Assumed index | Assumed annual fee | Assumed annual rate of tax |
|---|
Australian Equity | ASA52
S&P/ASX 300 Total Return Index | 0.05% | 0.00% |
International Equity (hedged) | DE725341
MSCI All Country World Ex Australia Equities Index with Special Tax (100% hedged to AUD) | 0.11% | 14.00% |
International Equity (unhedged) | DN714533
MSCI All Country World Ex Australia Equities Index with Special Tax (unhedged in AUD) | 0.09% | 14.00% |
Australian Listed Property | ASA6PROP
S&P/ASX 300 A REIT Total Return Index | 0.12% | 14.00% |
International Listed Property | RAHRSAH
FTSE EPRA Nareit Developed ex Aus Rental 100% Hedged to AUD Net Tax (Super) Index | 0.22% | 14.00% |
Australian Listed Infrastructure | FDCIISAH
FTSE Developed Core Infrastructure 100% Hedged to AUD Net Tax (Super) Index | 0.26% | 14.00% |
International Listed Infrastructure | FDCIISAH
FTSE Developed Core Infrastructure 100% Hedged to AUD Net Tax (Super) Index | 0.26% | 14.00% |
Australian Unlisted Property | MSCI/Mercer Australia Core Wholesale Monthly Property Fund Index – NAV Weighted Post Fee Total Return (All Funds) | 0% | 14.00% |
International Unlisted Property | MSCI/Mercer Australia Core Wholesale Monthly Property Fund Index – NAV Weighted Post Fee Total Return (All Funds) | 0% | 14.00% |
Australian Unlisted Infrastructure | MSCI Australia Quarterly Private Infrastructure Fund Index (Unfrozen) – NAV Weighted Post Fee Total Return (All Funds) | 0% | 14.00% |
International Unlisted Infrastructure | MSCI Australia Quarterly Private Infrastructure Fund Index (Unfrozen) – Nav Weighted Post Fee Total Return (All Funds) | 0% | 14.00% |
Australian Fixed Interest | BACM0
Bloomberg Ausbond Composite 0+ Yr Index | 0.10% | 15.00% |
International Fixed Interest | LEGATRAH
Bloomberg Barclays Global Aggregate Index (hedged to AUD) | 0.10% | 15.00% |
Australian Cash | BAUBIL
Bloomberg Ausbond Bank Bill Index | 0.04% | 15.00% |
International Cash | BAUBIL
Bloomberg Ausbond Bank Bill Index | 0.04% | 15.00% |
Other/Commodities | | 0.10% | 14.50% |
It’s important to note that
none of these benchmarks have ethical screening applied to them. Cruelty Free Super screens investments to ensure that only companies that meet our
well defined ethical investment criteria are included in the portfolio.
6. Where can I find out more information about the calculation of the performance test?
You can read more technical information about how performance is calculated in the
SIS act.
7. What is Cruelty Free Super’s actual investment return?
You can find Cruelty Free Super’s performance on our
returns page.
8. How do I compare Cruelty Free Super to a MySuper product?
You can use the ATO’s
YourSuper comparison tool. As this tool only includes MySuper products and Cruelty Free Super is not a MySuper product, you can use the information below for our fund:
Annual fee on a $50,000 account balance: $656.00 as per the example in our
PDS8 year net return as at 30 June 2023: 4.30%
Returns are after percentage based administration and investment fees, transaction costs and taxes have been taken out, but before flat dollar administration fees have been deducted. Returns for periods of greater than one year are on a per annum compound basis.
Investment returns are historical and past performance is not indicative of future performance. Return of capital and the performance of your investment is not guaranteed.