Recently, ASIC penalised super fund Spaceship for making false and misleading statements about its GrowthX fund.
ASIC took issue with Spaceship’s claim it was actively managing the portfolio and being selective in deciding which stocks to include and which to omit, based on profitability and product differentiation.
From the Spaceship site:
‘We will fight to get you the very best assets in your portfolio…. We will measure companies in our portfolio based on their ability to provide defensibility of profits and high levels of product differentiation.’
It turns out that 79% of the Spaceship GrowthX fund is comprised of index funds that include all companies in the market, with no qualitative analysis or selective stock picking at all.
What’s fascinating is that Spaceship chose the better investment approach but decided to tell their target customers a different story.
Why? Because, most people don’t buy the indexing philosophy, despite the data showing it generally provides a better return than the more active approach the Spaceship website espouses.
What’s fascinating is that Spaceship chose the better investment approach but decided to tell their target customers a different story.
Spaceship’s target customers are millennials and I think millennials are skeptical and intelligent enough to understand the basis for an index strategy.
Possibly, Spaceship didn’t hold the same faith in their target customers’ ability to get on board with the better approach.
Or, perhaps, they were looking for a way to manage the fund at indexing costs while charging active prices.
Either way, it’s sad a superannuation fund would hold such cynicism for the next investment generation. And, I think, a lost opportunity to attract the younger, more discerning customer by marketing the less popular but more scientifically guided investment approach.
If Spaceship’s younger target market finds out, I think they are in for a rough ride.
