Report: Master Trust default fund review

Hymans Robertson’s Master Trust Insights report examines how recent market events and fund performance have impacted the future retirement incomes of different members. Using its Member Outcomes Tracker to assess the impact of almost two years of pandemic experience on member outcomes across the Master Trust providers, the report finds that from the market lows of March 2020, outcomes steadily improved into Q1 2021.

Key findings:

  • growth fund performance has been strong, with providers returning at least 6% p.a
  • performance during the consolidation phase has been generally strong but differences in strategy have led to wide dispersion in returns, which range from c.4% to c.10% p.a 
  • differences in pre-retirement investment strategies are evident, with wide dispersion of default fund performance and risk across providers. 3-year returns have differed by as much as c.9% p.a.

The report also found that core beliefs remain unchanged and people expect risk to be rewarded over long horizons and advocate effective risk management to support good outcomes for those closer to retirement. The analysis shows there are a range of approaches adopted by providers, with some expected to support better member outcomes than others.