The data to April 2022, published in Rainmaker’s Superannuation Benchmarking Report, revealed that at its peak, international equities options had an 8.6% performance advantage over active options.
“Indexed investment options charge investment fees of 0.12%*, compared to the MySuper average of 1.00%,” said Alex Dunnin, executive director of research and compliance at Rainmaker Information.
“The performance advantage, as seen in international equities, is only further highlighting that indexing is likely to grow its presence in superannuation.”
Over the same period, indexed international equities options also matched the equivalent capital market index with a slight margin of underperformance, even after accounting for differences in tax status.
Over the past 12 months, the MSCI World ex Aust Index returned 2.8% while indexed and active equities returned 2.1% and –3.8%respectively.
Over five years the market index returned 10.0% p.a., versus 9.4% p.a. for indexed options and 7.5% p.a. for actively managed international equities options.
Looking at the rolling 12-month returns over five years; indexed outperformance has not been a constant theme.
From April 2017 actively managed options maintained a consistent performance advantage over indexed options until April 2018.Following that, the trend reversed, with indexed options leading in performance.
“The COVID downturn diminished the performance advantage of indexed options,” said Dunnin.
“During the recovery phase from mid-2020 untilmid-2021, active options surged ahead.”
As markets cooled, the trend reversed with the indexed options having a returns advantage as high as 8.6% in January 2022.
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Total risk market inflows were down a marginal 0.6% over the year to June 2024, decreasing from $18.3 billion to $18.2 billion.
Dual access ETPs, which are transacted both on stock exchanges and off-market through funds managers, can cost four times as much as the rest of the Australian ETP market.
