Funds SA

In reply to the Hon. S.C. MULLIGHAN (Lee) (24 July 2019). (Estimates Committee B)

The Hon. R.I. LUCAS (Treasurer): I have been advised the following:

Funds SA assesses total investment related fees/costs incurred by calculating an indirect cost ratio (ICR). The ICR represents the total investment costs/expenses as a percentage of funds under management and is a standard expense measurement tool used in the funds management and superannuation industry. Types of fees/costs included in Funds SA's ICR include:

Fund Manager fees, including performance fees

Fees/costs incurred by underlying funds in which Funds SA is directly or indirectly invested

Transaction costs

Corporate expenses

Custody fees

For the year ended 30 June 2019, the total ICR incurred by Funds SA was 0.88 per cent, or $8,800 per $1 million. For the year ended 30 June 2019, total fund manager fees were 0.62 per cent, or $202.9 million. Across the Funds SA investment options, the range of fees paid directly by Funds SA to investment managers for the year ended 30 June 2019 were as follows:

Cash, 0.05 per cent

Capital Defensive, 0.30 per cent

Conservative, 0.35 per cent

Moderate, 0.50 per cent

Balanced, 0.60 per cent

Growth, 0.66 per cent

High growth, 0.67 per cent

Defined benefit strategy, 0.79 per cent

All returns earned by Funds SA investors are reported after the payment of fees.

A summary of funds under management (by manager as at 30 June 2019) is attached.

PLEASE NOTE: the fund managers detailed above cover the top 50 by Funds SA funds under management. Funds SA utilises managers beyond this cohort however, the funds under management of those outside the top 50 is small by comparison.