1 00:00:04,140 --> 00:00:06,450 Sean Aylmer: Welcome to the Fear and Greed daily interview, I'm Sean 2 00:00:06,450 --> 00:00:11,340 Sean Aylmer: Aylmer. This year, Superannuation assets in Australia hit $ 3. 3 3 00:00:11,340 --> 00:00:16,860 Sean Aylmer: trillion, an enormous chunk of our wealth only behind our 4 00:00:16,860 --> 00:00:20,279 Sean Aylmer: homes. Super is vital for a comfortable retirement, yet the 5 00:00:20,280 --> 00:00:24,239 Sean Aylmer: information about funds, their fees and performance can often be 6 00:00:24,239 --> 00:00:28,080 Sean Aylmer: a bit overwhelming. For the last decade, online investment advisor 7 00:00:28,080 --> 00:00:31,230 Sean Aylmer: Stockspot has been putting together the annual Fat Cat Funds 8 00:00:31,230 --> 00:00:36,300 Sean Aylmer: Report, a comprehensive analysis of Superfunds across the country, identifying 9 00:00:36,300 --> 00:00:39,330 Sean Aylmer: the best and worst performers. The 2002 report has been 10 00:00:39,330 --> 00:00:42,210 Sean Aylmer: released this week. Remember, this is general information only and 11 00:00:42,210 --> 00:00:45,419 Sean Aylmer: you should get professional advice before making any investment decision. 12 00:00:45,840 --> 00:00:49,440 Sean Aylmer: Chris Brycki is the founder and CEO of Stockspot. Chris, welcome back to 13 00:00:49,440 --> 00:00:50,130 Sean Aylmer: Fear and Greed. 14 00:00:50,580 --> 00:00:52,020 Chris Brycki: Thanks for having me back on, Sean. 15 00:00:52,409 --> 00:00:56,310 Sean Aylmer: Great name for a report. Fat Cat Funds Report. Who 16 00:00:56,310 --> 00:00:57,120 Sean Aylmer: came up with that? 17 00:00:57,510 --> 00:01:01,050 Chris Brycki: Super isn't typically the most sexy topic for people to 18 00:01:01,200 --> 00:01:04,560 Chris Brycki: learn about, so I originally thought it was something that 19 00:01:04,560 --> 00:01:06,630 Chris Brycki: was a bit more attention grabbing. And I think the 20 00:01:06,630 --> 00:01:09,930 Chris Brycki: idea came out of all of those suits in the 21 00:01:10,140 --> 00:01:14,940 Chris Brycki: high office towers managing our Superannuation, and actually, in a 22 00:01:14,940 --> 00:01:18,420 Chris Brycki: lot of cases, unfortunately, the research were showing that the 23 00:01:18,420 --> 00:01:21,209 Chris Brycki: managers of the Superfunds were doing very well, but their members 24 00:01:21,209 --> 00:01:22,020 Chris Brycki: not so much. 25 00:01:22,380 --> 00:01:25,740 Sean Aylmer: Okay. There is plenty of information out there about Superfunds, 26 00:01:25,740 --> 00:01:28,290 Sean Aylmer: why did you decide to produce this report? 27 00:01:28,740 --> 00:01:30,390 Chris Brycki: Well, there's lots of info out there, but it's very 28 00:01:30,390 --> 00:01:33,209 Chris Brycki: hard for people to really compare their fund to others 29 00:01:33,209 --> 00:01:35,430 Chris Brycki: that are similar out there. And so what I noticed 30 00:01:35,430 --> 00:01:38,729 Chris Brycki: early on is that all Superfunds have plenty of info 31 00:01:38,730 --> 00:01:42,209 Chris Brycki: on their websites, but it's very hard to know what's 32 00:01:42,209 --> 00:01:45,390 Chris Brycki: what, am I comparing the same things, what sort of 33 00:01:45,390 --> 00:01:48,720 Chris Brycki: time frame's relevant, what fee should I be including? And 34 00:01:48,720 --> 00:01:51,390 Chris Brycki: what I noticed is a lot of people just don't 35 00:01:51,390 --> 00:01:54,330 Chris Brycki: make a decision. They reach a point where they're just 36 00:01:54,810 --> 00:01:57,360 Chris Brycki: frustrated and confused and that can actually be a really 37 00:01:57,360 --> 00:02:00,840 Chris Brycki: costly decision. We tried to get all of the info 38 00:02:00,840 --> 00:02:04,559 Chris Brycki: we could from every Superfund that we could find, compare 39 00:02:04,560 --> 00:02:06,360 Chris Brycki: it on a like for like basis and make it 40 00:02:06,360 --> 00:02:09,870 Chris Brycki: easy for people to actually check how their fund is doing compared 41 00:02:09,870 --> 00:02:10,380 Chris Brycki: to others. 42 00:02:10,889 --> 00:02:13,590 Sean Aylmer: That sounds like an enormous task. Is it apples and 43 00:02:13,590 --> 00:02:15,720 Sean Aylmer: apples or is it apples and oranges half the time 44 00:02:15,870 --> 00:02:16,890 Sean Aylmer: when you're thinking about these Superfunds? 45 00:02:18,060 --> 00:02:22,950 Chris Brycki: Well, even there's a new online website that the government 46 00:02:22,950 --> 00:02:25,680 Chris Brycki: offers that allows you to compare different MySuper funds. But 47 00:02:25,680 --> 00:02:27,750 Chris Brycki: the challenge even with this website is that it is 48 00:02:27,750 --> 00:02:31,470 Chris Brycki: apples for oranges because they compare all of MySuper products, 49 00:02:31,470 --> 00:02:34,350 Chris Brycki: but the MySuper products span a huge range of different 50 00:02:34,350 --> 00:02:39,299 Chris Brycki: risk. There's MySuper products with something like 98% of growth 51 00:02:39,300 --> 00:02:42,420 Chris Brycki: assets, all the way down to funds with maybe 70%. 52 00:02:43,110 --> 00:02:45,960 Chris Brycki: It's not fair to say that one with 70% has 53 00:02:45,960 --> 00:02:49,380 Chris Brycki: performed worse because actually compared to the amount of risk 54 00:02:49,380 --> 00:02:52,110 Chris Brycki: it's taking, it might have actually done well. What we 55 00:02:52,110 --> 00:02:55,320 Chris Brycki: do is actually bucket funds based on the amount of 56 00:02:55,320 --> 00:02:58,590 Chris Brycki: growth assets versus defensive assets, and we put them into 57 00:02:58,590 --> 00:03:01,739 Chris Brycki: 20% buckets. We say, okay, well if you've got between 80 to 58 00:03:01,770 --> 00:03:06,720 Chris Brycki: 100% growth assets, we'll put you in one group, 60 to 80%, 40 59 00:03:06,720 --> 00:03:10,080 Chris Brycki: to 60%, et cetera. And so it allows people to 60 00:03:10,080 --> 00:03:12,870 Chris Brycki: at least compare their funds to ones in the realm 61 00:03:12,930 --> 00:03:14,460 Chris Brycki: that there's is as well. 62 00:03:14,940 --> 00:03:18,900 Sean Aylmer: Okay. Let's start with the best of the Fat Cats 63 00:03:18,900 --> 00:03:21,540 Sean Aylmer: and you are calling them the Fit Cats. Who came 64 00:03:21,540 --> 00:03:22,170 Sean Aylmer: out on top? 65 00:03:22,680 --> 00:03:25,320 Chris Brycki: Well, this year it was actually Qantas Super came out 66 00:03:25,320 --> 00:03:29,250 Chris Brycki: on top. Not a Superfund you hear in the news 67 00:03:29,250 --> 00:03:31,800 Chris Brycki: that often and probably for good reason. It's a fund 68 00:03:31,800 --> 00:03:36,480 Chris Brycki: that's open for Super employees and former employees, but actually 69 00:03:36,480 --> 00:03:39,150 Chris Brycki: it's done pretty well over the last five years. We 70 00:03:39,150 --> 00:03:41,280 Chris Brycki: found it had the most Fit Cat funds, which are 71 00:03:41,280 --> 00:03:44,700 Chris Brycki: funds that have done better than the population over five 72 00:03:44,700 --> 00:03:46,950 Chris Brycki: years. And it had done well in actually all of 73 00:03:46,950 --> 00:03:49,380 Chris Brycki: the different categories from high growth all the way down 74 00:03:49,380 --> 00:03:50,850 Chris Brycki: to conservative. 75 00:03:52,890 --> 00:03:54,150 Sean Aylmer: Okay. The fact that that's a corporate fund? 76 00:03:54,510 --> 00:03:56,490 Chris Brycki: That's right it's a corporate Superfund. 77 00:03:57,480 --> 00:04:00,540 Sean Aylmer: It's unusual, isn't it, to find a corporate Superfund doing 78 00:04:00,540 --> 00:04:01,080 Sean Aylmer: so well? 79 00:04:01,920 --> 00:04:04,350 Chris Brycki: Not usually. I think in the past our reports actually 80 00:04:04,350 --> 00:04:08,010 Chris Brycki: found other corporate funds have done quite well, similar to 81 00:04:08,010 --> 00:04:11,280 Chris Brycki: other not- for- profit funds it does allow them to 82 00:04:11,280 --> 00:04:14,040 Chris Brycki: focus very much on the best financial interest of their 83 00:04:14,040 --> 00:04:16,469 Chris Brycki: members and in some cases they end up on top. 84 00:04:17,670 --> 00:04:19,589 Sean Aylmer: You just told me the answer to my next question. 85 00:04:20,550 --> 00:04:22,620 Sean Aylmer: Corporate funds are not- for- profit, which is very different to 86 00:04:22,620 --> 00:04:25,080 Sean Aylmer: retail funds and industry funds for that matter? 87 00:04:26,010 --> 00:04:29,159 Chris Brycki: Yeah, industry funds also in theory are not- for- profit, 88 00:04:29,160 --> 00:04:31,169 Chris Brycki: but a lot of our work shows that there's actually 89 00:04:31,170 --> 00:04:33,480 Chris Brycki: a lot of costs embedded in these businesses and as 90 00:04:33,480 --> 00:04:35,880 Chris Brycki: a result their fees aren't too different to retail funds. 91 00:04:36,330 --> 00:04:38,159 Chris Brycki: They used to be quite a bit cheaper, but that's 92 00:04:38,160 --> 00:04:43,140 Chris Brycki: converging. But corporate funds in theory don't need the huge 93 00:04:43,140 --> 00:04:46,470 Chris Brycki: teams, they don't need to actually impose big costs on 94 00:04:46,470 --> 00:04:48,720 Chris Brycki: their members, and that's probably one of the reasons why 95 00:04:48,720 --> 00:04:50,370 Chris Brycki: they sometimes perform very well. 96 00:04:50,730 --> 00:04:53,729 Sean Aylmer: Okay. Who else fits into the Fit Cat class? Have 97 00:04:53,730 --> 00:04:55,080 Sean Aylmer: you got another couple of examples? 98 00:04:56,040 --> 00:04:58,080 Chris Brycki: One that's been up there quite often and I think 99 00:04:58,080 --> 00:05:02,160 Chris Brycki: was a previous winner was UniSuper. This is a Superfund 100 00:05:02,400 --> 00:05:07,080 Chris Brycki: for a lot of employees of universities. HESTA, another industry 101 00:05:07,080 --> 00:05:11,099 Chris Brycki: Superfund, Australian Super, and actually IOOF as well, which is 102 00:05:11,400 --> 00:05:12,720 Chris Brycki: a for- profit fund. 103 00:05:13,410 --> 00:05:15,270 Sean Aylmer: Stay with me Chris, we'll be back in a minute. 104 00:05:21,630 --> 00:05:25,919 Sean Aylmer: I'm speaking to Stockspot CEO, Chris Brycki. And what about the 105 00:05:25,920 --> 00:05:29,010 Sean Aylmer: other side, the worst performers, you're calling them the Fat Cats? 106 00:05:29,730 --> 00:05:32,820 Chris Brycki: The Fat Cats, sadly, we often see the same names 107 00:05:32,820 --> 00:05:36,779 Chris Brycki: in this list year, after year, after year. OnePath leads 108 00:05:36,779 --> 00:05:39,660 Chris Brycki: the charge for being the worst performing Superfund for the 109 00:05:39,720 --> 00:05:43,979 Chris Brycki: 10th year in a row. I struggle to understand how 110 00:05:43,980 --> 00:05:48,510 Chris Brycki: something can lose repeatedly and still exist in its form, 111 00:05:48,510 --> 00:05:52,260 Chris Brycki: but it does. OnePath has lost every single year and 112 00:05:52,260 --> 00:05:54,779 Chris Brycki: really high fees are the characteristic that make it very 113 00:05:54,779 --> 00:05:57,839 Chris Brycki: difficult for this fund to do well. Up there as 114 00:05:57,839 --> 00:06:02,130 Chris Brycki: well is the Colonial funds. Colonial First State, AMP and 115 00:06:02,130 --> 00:06:03,780 Chris Brycki: ClearView are two of the others. 116 00:06:04,440 --> 00:06:07,349 Sean Aylmer: Okay. It's almost mathematically impossible to lose 10 years in 117 00:06:07,350 --> 00:06:11,880 Sean Aylmer: a row, I would've thought, unless there was something outside, 118 00:06:11,880 --> 00:06:16,230 Sean Aylmer: which of course is fees. Because when you do poorly, 119 00:06:16,800 --> 00:06:20,039 Sean Aylmer: you're comparing the following year on a lower base, so 120 00:06:20,040 --> 00:06:21,300 Sean Aylmer: you would think that you would be able to pick 121 00:06:21,300 --> 00:06:23,070 Sean Aylmer: up, but is it mostly because fees are high? Is 122 00:06:23,070 --> 00:06:26,400 Sean Aylmer: that why the Fat cats aren't doing so well? 123 00:06:27,029 --> 00:06:30,600 Chris Brycki: Fees become such a insurmountable drag on these funds that 124 00:06:30,600 --> 00:06:33,839 Chris Brycki: if you're charging 1. 5 or 2% per year in 125 00:06:33,839 --> 00:06:37,260 Chris Brycki: fees, you have to really have amazing performance to overcome 126 00:06:37,290 --> 00:06:40,440 Chris Brycki: that. And so the characteristic that we see over and 127 00:06:40,440 --> 00:06:42,869 Chris Brycki: over with this OnePath fund is one, it has a 128 00:06:42,870 --> 00:06:45,510 Chris Brycki: lot of different funds and it comes out of, I 129 00:06:45,510 --> 00:06:47,430 Chris Brycki: think a lot of these were created in the early 130 00:06:47,430 --> 00:06:52,440 Chris Brycki: 2010s, whole bunch of different quite complex products with very 131 00:06:52,440 --> 00:06:55,589 Chris Brycki: high fee structures. Now a lot of those funds are 132 00:06:55,589 --> 00:06:58,650 Chris Brycki: now closed for new money, which is good so there's 133 00:06:58,650 --> 00:07:01,320 Chris Brycki: not likely to be new people entering them, but sadly 134 00:07:01,500 --> 00:07:03,690 Chris Brycki: a lot of them have such big exit fees that 135 00:07:03,690 --> 00:07:06,060 Chris Brycki: some of their earlier members are still stuck in them 136 00:07:06,330 --> 00:07:09,150 Chris Brycki: and they're stuck in these funds that are compounding 1. 137 00:07:09,510 --> 00:07:12,150 Chris Brycki: 5 or 2% a year in fees. We found a 138 00:07:12,150 --> 00:07:14,310 Chris Brycki: few years ago, one of these OnePath funds that had done 139 00:07:14,310 --> 00:07:17,640 Chris Brycki: very badly was actually an index fund, but an index 140 00:07:17,640 --> 00:07:21,240 Chris Brycki: fund charging over 2% a year. And so that fund 141 00:07:21,240 --> 00:07:25,410 Chris Brycki: is guaranteed to underperform by 2% a year and so not surprisingly 142 00:07:25,410 --> 00:07:30,120 Chris Brycki: over five years it had underperformed the market by 13%, 143 00:07:30,330 --> 00:07:32,940 Chris Brycki: which is why it ended up in this poor performing list. 144 00:07:33,510 --> 00:07:36,540 Sean Aylmer: Okay. You mentioned earlier on that retail and industry fund 145 00:07:36,630 --> 00:07:41,760 Sean Aylmer: fees were merging somewhat or they were getting closer. Traditionally 146 00:07:42,390 --> 00:07:45,270 Sean Aylmer: retail funds have charged more than Superfunds, and we've all 147 00:07:45,270 --> 00:07:48,600 Sean Aylmer: seen the ads on TV about that. Is that a 148 00:07:48,630 --> 00:07:51,150 Sean Aylmer: trend that's likely to continue? And then the second part 149 00:07:51,150 --> 00:07:54,720 Sean Aylmer: of that is, how can the OnePath's of the world keep operating with 150 00:07:54,720 --> 00:07:55,680 Sean Aylmer: that sort of performance? 151 00:07:56,940 --> 00:08:00,450 Chris Brycki: Two great questions. I think one reason why the fees 152 00:08:00,450 --> 00:08:03,480 Chris Brycki: are converging on the bigger end is that your Super, 153 00:08:03,480 --> 00:08:07,410 Chris Brycki: your future reforms that came in are now really supporting 154 00:08:07,410 --> 00:08:09,480 Chris Brycki: the work that we've done and highlighting some of these 155 00:08:09,480 --> 00:08:12,420 Chris Brycki: funds that are consistently doing badly for members, but also 156 00:08:12,420 --> 00:08:15,120 Chris Brycki: putting a lot more pressure on the trustees of these 157 00:08:15,120 --> 00:08:18,480 Chris Brycki: funds to deliver better results to their members. What we're 158 00:08:18,480 --> 00:08:20,429 Chris Brycki: seeing is on the bigger end, and a lot of 159 00:08:20,430 --> 00:08:24,780 Chris Brycki: these bank owned funds are actually being forced to launch 160 00:08:24,810 --> 00:08:29,490 Chris Brycki: newer lower fee funds for their members or reform some 161 00:08:29,490 --> 00:08:32,969 Chris Brycki: of their higher fee funds to avoid being in the 162 00:08:32,970 --> 00:08:38,100 Chris Brycki: list the government's now publishing on poor performers. There is 163 00:08:38,190 --> 00:08:40,380 Chris Brycki: some movement and there is a bit more pressure on 164 00:08:40,380 --> 00:08:44,940 Chris Brycki: trustees to do this. On your second question, how do 165 00:08:44,940 --> 00:08:47,400 Chris Brycki: these funds still exist? It's a great question. I really 166 00:08:47,400 --> 00:08:50,790 Chris Brycki: think in a lot of other industries, and medicine might 167 00:08:50,790 --> 00:08:53,610 Chris Brycki: be a good example, if there was a drug that 168 00:08:53,610 --> 00:08:56,790 Chris Brycki: was consistently making people sick and not having the positive 169 00:08:56,790 --> 00:08:59,400 Chris Brycki: impact that it was first thought, it would be very quickly 170 00:08:59,400 --> 00:09:02,010 Chris Brycki: pulled from shelves and recalled and no one would be 171 00:09:02,010 --> 00:09:04,620 Chris Brycki: allowed to take it. But we've got this example of 172 00:09:04,620 --> 00:09:08,940 Chris Brycki: a Superfund that's continually shown to be not a healthy 173 00:09:08,940 --> 00:09:11,760 Chris Brycki: product and not helping its members, but still stays on 174 00:09:11,760 --> 00:09:14,040 Chris Brycki: the shelves and people stay in it. I think it 175 00:09:14,040 --> 00:09:18,240 Chris Brycki: shows a combination of a lack of, unfortunately, financial literacy 176 00:09:18,240 --> 00:09:21,569 Chris Brycki: for some people. Also, a lot of confusion for people 177 00:09:21,570 --> 00:09:24,630 Chris Brycki: because it is difficult to compare. It shows that there's 178 00:09:24,630 --> 00:09:27,239 Chris Brycki: some friction and it also shows there's a lot of 179 00:09:27,240 --> 00:09:31,020 Chris Brycki: apathy because Super isn't something people are that engaged about. 180 00:09:31,679 --> 00:09:34,110 Chris Brycki: Unfortunately there's a bit of a market failure I think 181 00:09:34,110 --> 00:09:37,140 Chris Brycki: in Superannuation where what you would expect to happen in 182 00:09:37,170 --> 00:09:41,130 Chris Brycki: other products where poor products just disappear, whether it's a 183 00:09:41,130 --> 00:09:43,770 Chris Brycki: poor restaurant or medicine that doesn't work, they don't exist 184 00:09:43,770 --> 00:09:47,850 Chris Brycki: for very long. Unfortunately, Super is an area where we 185 00:09:47,850 --> 00:09:51,270 Chris Brycki: really do as a society require government to take more 186 00:09:51,270 --> 00:09:55,080 Chris Brycki: action, otherwise these poor performing products stay in existence. 187 00:09:55,620 --> 00:09:57,660 Sean Aylmer: Okay. Now having said all that though, there have been 188 00:09:57,660 --> 00:10:00,329 Sean Aylmer: merges in the Super industry, hasn't there? Because some of 189 00:10:00,330 --> 00:10:04,260 Sean Aylmer: the smaller funds have become subsumed into some of those 190 00:10:04,410 --> 00:10:06,840 Sean Aylmer: larger funds. Is that a good or a bad thing? 191 00:10:07,620 --> 00:10:10,380 Chris Brycki: It's neither in my mind. In theory, it should be 192 00:10:10,380 --> 00:10:14,309 Chris Brycki: a good thing. The economic theory is if you're a 193 00:10:14,309 --> 00:10:17,340 Chris Brycki: bigger entity you should be able to provide economies of 194 00:10:17,340 --> 00:10:19,290 Chris Brycki: scale to your members, and so you should be able 195 00:10:19,290 --> 00:10:23,010 Chris Brycki: to reduce fees to your members. In reality, what we've 196 00:10:23,010 --> 00:10:26,069 Chris Brycki: seen is with some of these recent mergers, the pitch 197 00:10:26,070 --> 00:10:28,560 Chris Brycki: to the members of the smaller fund has been, " Well, 198 00:10:28,710 --> 00:10:30,750 Chris Brycki: if we merge with this bigger fund, your fees will 199 00:10:30,750 --> 00:10:33,420 Chris Brycki: be lower so you'll be better off." But actually some 200 00:10:33,420 --> 00:10:36,600 Chris Brycki: of these funds have been fined now by the regulator 201 00:10:36,600 --> 00:10:40,440 Chris Brycki: for misleading consumers because their fees didn't fall when they 202 00:10:40,440 --> 00:10:43,079 Chris Brycki: merged with the bigger fund because the bigger fund had 203 00:10:43,200 --> 00:10:44,729 Chris Brycki: higher fees in the first place. 204 00:10:44,910 --> 00:10:45,120 Sean Aylmer: Right. 205 00:10:45,120 --> 00:10:48,240 Chris Brycki: And so beyond a certain size, and I think in 206 00:10:48,240 --> 00:10:50,820 Chris Brycki: the Super market it's probably in the low billions of 207 00:10:50,820 --> 00:10:53,429 Chris Brycki: dollars, there isn't a lot of evidence that there is 208 00:10:53,429 --> 00:10:57,030 Chris Brycki: additional economies of scale. And in fact, it looks like 209 00:10:57,030 --> 00:11:00,150 Chris Brycki: that some of these bigger funds are seeing dis- economies 210 00:11:00,150 --> 00:11:02,939 Chris Brycki: of scale where their fees are actually increasing as they 211 00:11:02,940 --> 00:11:05,609 Chris Brycki: get larger. And it's hard to know whether that's because 212 00:11:05,610 --> 00:11:09,809 Chris Brycki: they're becoming less efficient or whether they're just trying to 213 00:11:09,900 --> 00:11:15,059 Chris Brycki: build themselves into bigger entities. But the difference between a 214 00:11:15,059 --> 00:11:19,079 Chris Brycki: 20 billion fund or a 50 or a 100 billion in terms of 215 00:11:19,110 --> 00:11:21,810 Chris Brycki: lower fees for members seems to be negligible. 216 00:11:22,350 --> 00:11:25,740 Sean Aylmer: Right. One final thing, Chris, you found that index funds 217 00:11:25,890 --> 00:11:29,699 Sean Aylmer: continue to out perform active managers, which is interesting in 218 00:11:29,700 --> 00:11:33,059 Sean Aylmer: this current environment. Why is that the case? Why are 219 00:11:33,059 --> 00:11:34,350 Sean Aylmer: index funds doing so well? 220 00:11:35,460 --> 00:11:39,030 Chris Brycki: It's well published in a lot of research and academia 221 00:11:39,030 --> 00:11:42,179 Chris Brycki: the index funds do better than active managers over the 222 00:11:42,179 --> 00:11:44,220 Chris Brycki: long run. This is due to the simple fact that 223 00:11:44,220 --> 00:11:47,730 Chris Brycki: on average, active fund managers equal the share market before 224 00:11:47,730 --> 00:11:50,790 Chris Brycki: fees, and then after their fees are deducted, they necessarily 225 00:11:50,790 --> 00:11:53,460 Chris Brycki: have to underperform. There's always going to be a few 226 00:11:53,520 --> 00:11:56,220 Chris Brycki: bright sparks, a few fund managers that do well, but 227 00:11:56,220 --> 00:11:59,040 Chris Brycki: on average fund managers do badly. And because the Super 228 00:11:59,040 --> 00:12:02,640 Chris Brycki: industry is really all of the fund managers, it makes 229 00:12:02,640 --> 00:12:05,609 Chris Brycki: a lot of sense that anyone that's actively investing into 230 00:12:05,610 --> 00:12:08,130 Chris Brycki: the Super industry is going to struggle over the long 231 00:12:08,130 --> 00:12:11,760 Chris Brycki: run because the Super industry is the market. Why do 232 00:12:11,760 --> 00:12:14,400 Chris Brycki: they do well in tougher markets like this year? Well, 233 00:12:14,490 --> 00:12:18,150 Chris Brycki: the mathematics of indexing actually holds true in all markets. 234 00:12:18,840 --> 00:12:23,070 Chris Brycki: I think there's a belief that in tougher markets you 235 00:12:23,070 --> 00:12:24,929 Chris Brycki: don't want to be following the index you want to 236 00:12:24,929 --> 00:12:28,950 Chris Brycki: pay a professional manager to manage your money. The research 237 00:12:28,950 --> 00:12:31,710 Chris Brycki: actually shows that in past down markets, whether it was 238 00:12:31,710 --> 00:12:37,470 Chris Brycki: the 1987 crash, the 2000 . com tech rec or 2008, 239 00:12:37,530 --> 00:12:40,290 Chris Brycki: active managers didn't do any better than the index and 240 00:12:40,290 --> 00:12:44,250 Chris Brycki: actually it was more sensible to continue investing in the 241 00:12:44,250 --> 00:12:46,920 Chris Brycki: index. And so I think we're going to see that 242 00:12:46,920 --> 00:12:51,750 Chris Brycki: again. And some of the recent research by SPIVA and the SMP, which 243 00:12:51,750 --> 00:12:54,120 Chris Brycki: is a study that's done every year into active management, 244 00:12:54,330 --> 00:12:57,870 Chris Brycki: is showing that, again, for 2022 that despite the market 245 00:12:57,870 --> 00:13:00,569 Chris Brycki: turmoil, despite the fact that bonds and shares have had their 246 00:13:01,080 --> 00:13:05,130 Chris Brycki: worst year combined in 100 years, active managers didn't predict 247 00:13:05,130 --> 00:13:06,840 Chris Brycki: it, they weren't able to get ahead of this, and 248 00:13:06,840 --> 00:13:10,620 Chris Brycki: in fact, investors would've been safer simply plonking their money in 249 00:13:10,620 --> 00:13:11,340 Chris Brycki: the index. 250 00:13:11,610 --> 00:13:13,500 Sean Aylmer: Chris, thank you for talking to Fear and Greed. 251 00:13:13,860 --> 00:13:14,850 Chris Brycki: Thanks for having me back. 252 00:13:15,360 --> 00:13:18,120 Sean Aylmer: That was Chris Brycki, founder and CEO of online investment 253 00:13:18,120 --> 00:13:20,820 Sean Aylmer: advisor, Stockspot. This is the Fear and Greed Daily interview. 254 00:13:20,820 --> 00:13:23,730 Sean Aylmer: Remember, this information is general in nature and you should 255 00:13:23,730 --> 00:13:27,270 Sean Aylmer: seek professional advice before making any investment decisions. Join us 256 00:13:27,270 --> 00:13:29,250 Sean Aylmer: every morning for the full episode of Fear and Greed, 257 00:13:29,250 --> 00:13:32,850 Sean Aylmer: Australia's most popular business podcast. I'm Sean Aylmer, enjoy your day.