🇦🇺Australia

Active Fund Underperformance Losses

1 verified sources

Definition

SPIVA Australia Mid-Year 2025 reports that 71% of Australian Equity General funds underperformed the S&P/ASX 200 by 1.9% (6.4% benchmark vs 4.5% funds) in H1 2025, with 85-96% underperformance over 10-15 years. Inadequate monitoring exacerbates these losses in super and insurance portfolios.

Key Findings

  • Financial Impact: 1.9% average underperformance H1 2025 (AUD benchmark-relative loss); 85% funds underperform over 15 years
  • Frequency: Ongoing, with 71% short-term and 85-96% long-term underperformance rates
  • Root Cause: Manual or delayed performance monitoring fails to identify and switch from underperforming active funds

Why This Matters

The Pitch: Insurance and Employee Benefit Funds in Australia 🇦🇺 lose 1.9-2.0% average annual returns on domestic equity due to underperformance. Automation of performance monitoring eliminates this drag.

Affected Stakeholders

Investment Committee, Fund Managers, Compliance Officers

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

SPS 515 Member Outcomes Reporting Non-Compliance

AUD 22,200-$1.1M civil penalties per breach (APRA scale for Category C/D RSE licensees)

Manual Performance Monitoring Overhead

20-40 hours/month per fund at AUD 150/hour analyst cost (AUD 3,000-6,000/month)

Strafzahlungen wegen fehlerhafter Diskriminierungstests

Logic-based estimate: for a mid-size employer with AUD 10m payroll and 10% contributions, failed annual nondiscrimination-style testing can trigger ~1% corrective contributions plus rectification costs ≈ AUD 100,000 in a breach year; penalty/interest/advice costs in the order of AUD 5,000–20,000 per late correction event.

Verzögerte Beitragseingänge durch manuelle Jahresprüfungen

Logic-based estimate: per employer arrangement with AUD 5m–10m annual premiums/contributions, delayed year-end adjustments of AUD 250,000–1,000,000 by 1–3 months create a financing cost of approx. AUD 1,250–15,000 per year; at 20–50 plans this scales to AUD 25,000–250,000 p.a.

Hohe Verwaltungskosten für manuelle Jahres-Compliance-Tests

Logic-based estimate: 5–15 hours of specialist work per plan at ~AUD 150/hour ≈ AUD 750–2,250 per plan per year; for 100 employer plans, AUD 75,000–225,000 p.a. in manual testing and documentation costs, of which ~AUD 20,000–80,000 is avoidable through automation.

Bußgelder wegen fehlerhafter COBRA-Mitteilungen

Quantified: up to USD 100 (≈ AUD 150) per day per affected beneficiary in statutory penalties, plus potential liability for individual health care claims that can easily exceed AUD 50,000 per serious case; across a mid-sized portfolio, this commonly aggregates to AUD 10,000–100,000+ annually.

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