The Australian Prudential Regulatory Authority recently released a list of superannuation funds it considers to be poor performers.
Thirteen were shown at the bottom of a performance table, a mix of bank-owned retail funds, industry funds and others.
The first thing to be clear about is that the said comparison was of MySuper funds only.
These are a particular class of super fund set up a decade ago to provide low-fee, no-frills options to hold the money of employees who fail to nominate a super fund to receive their employer contributions.
Eighty funds in total were compared.
There are hundreds of super funds in Australia and most were not part of the comparison.
The second point to recognise is that no attempt was made to consider where each fund invests.
For example, a fund that invests only in cash and fixed interest is always going to perform poorly long term compared to one that invests mostly in shares and property.
Some MySuper funds invest conservatively believing they should be careful with the money of disinterested members.
Some hold a broad mix of defensive and growth assets, and some take a high-growth approach.
Does the publication of the Pass and Fail lists mean the government wants all MySuper funds to invest entirely in high-risk shares and property in future? That will be the most likely response from fund managers.
Given that most members of these MySuper funds did not choose to be in them, or any fund, many will not be watching their accounts, and it seems unlikely that many will move out of the supposedly 'Failed' funds into the 'Passed' funds.
So the whole exercise seems a bit pointless.
The main effect will be reputational damage to fund managers because the press did not explain exactly what the report shows.
This was demonstrated by the urgent, last-minute moves to dissociate the industry funds on the Fail list from the peak body of industry super funds.
They no longer appear on the Industry Super Funds website.
Those same industry funds also offer other good funds that were not used in the comparison.
It would have been much more helpful if the managers had simply explained why the particular fund has earned low returns.
There are hundreds of super funds investing in thousands of different ways, with many different risk, fee and service levels.
It is very convenient to think that there must be good funds and bad ones.
Unfortunately, that is way too simplistic.
There is already plenty of research available to compare funds against other similar funds and appropriate benchmarks.
The key point is that super fund members must take an interest in their funds, read their reports, get advice, research them, and decide if they are happy with them or wish to change.