The analysis considered the investment performance to 30 June2020 that members aged in their 20s would have received afterapplying their age-based fees.
Young people can pay fees as much as eight times higher thanolder super fund members, before the 3% fee cap comes into effect,noted Rainmaker.
Rainmaker's assessment reviewed super funds that youngpeople are likely to join, reviewing MySuper products and selectedretail products that are becoming popular among young people.Reflecting this, Rainmaker did not assess the impact of insurancecosts.
QSuper was found to have delivered the best value overfive-years, achieving returns of 6.5% pa. It also ranked third overthree-years with 5.6% pa.
The digital disruptor Spaceship came in first over three-yearsand one-year with returns of 12.3% pa and 11.9% parespectively.
Rainmaker' age-based analysis lined up MySuper singlestrategy products against lifecycle products for people in their20's. On top of this, most fee studies normally assume amember has a $50,000 balance.
But most young people have much lower balances of $5,000. Superfund fees can hit these lower account balances harder, especiallyif there is a high dollar-based member fee.
Illustrating how this works in practice, , even small memberfees of $80 per year can have a huge impact.
Add in the cost of compulsory insurance and they could be payingtotal fees equivalent of 25% of their account balance.
"This means for many young people, superannuation feesare unfortunately what they should be worrying about, notreturns," said Alex Dunnin, Executive Director of Researchat Rainmaker Information.
"The way super funds structure their fees mean youngmembers pay disproportionately higher fees than olderpeople."
"This creates a big problem for the superannuationsector. It leaves it open to claims it is a product designed onlyfor old people. Yet they say they want young people to be engagedwith their superannuation."
"This is why we should applaud funds like QSuper andSpaceship. Their innovative thinking is precisely what thesuperannuation sector needs."
Other funds like Future Super, Virgin Money and Aware Super areleading the performance conversation and they should also beacknowledged.
Rainmaker found that the 10 best super funds for young people -in alphabetical order - are Australian Ethical, Aware Super, FutureSuper, HESTA, Media Super, QSuper, Spaceship, TasPlan, Virgin Moneyand Vision Super.
FUA in managed accounts platforms has continued its rapid growth, increasing by almost 50% p.a. in the last three years.
Australian retirees used to overwhelmingly favour retail superannuation funds. Not anymore.