An analysis of Spaceship — the Millenials’ Superfund
As a proud Chartered Accountant, there’s potentially nothing more satisfying than a reconciled set of accounts and a beautifully balanced financial model. You could say accounting is a metaphor for life — everything has its place and should be in a state of equilibrium…
With my love for numbers, people assume my personal finances are neatly squared away. Tax returns lodged on the 7th of July, income and expenses tracked to the cent and a consolidated spreadsheet of my net worth.
Well, this is not so, and I am embarrassed to tell you, is actually far from reality.
The reality is that I am harassed by my fiancé every month because I consistently forget to transfer my share of housekeeping money into the joint bank account. I pay a late fee to Origin because I forget to pay my utilities bill on time. I buy a brand new pair of hand wraps at the boxing gym every other week because I forget to bring them. And I am often only wearing one sock, because well, #careless.
While they may seem small things at the time, these minor expenses do add up, particularly when these habits compound over a number of years.
Step 1 was recognising I had a problem. Step 2 was remedying that problem. And what better way to do that than with a well-meaning New Year’s resolution. Thus, my New Year’s resolution was to focus on improving my mindfulness — to pay more attention to these minor, menial ‘life admin tasks’. Why?
Because how you do the little things is indicative of how you approach more important tasks.
The first thing on my long list of neglected life admin tasks was to consolidate my superannuation.
Despite all the propaganda from the ATO over the years about the importance of consolidating your super accounts, I always ignored it. ‘Bottom of the priority list,’ I subconsciously told myself.
And it wasn’t just the ATO nagging me to take action.
Superannuation has forever been perceived as this boring, stale, low return, mandatory thing. 9.5% of my salary is deposited into some war chest which I can’t touch for another 30 years. It’s for old people. I’m a millennial, I want to spend my money now, dammit!
After being stuck on a phone call with the ATO for 52 mins due to three unsuccessful attempts to login to my MyGov account (potentially the most un-user-friendly platform ever developed), my fears were realised.
Fifteen years of superannuation was spread amongst numerous accounts. Unclaimed super held in trust by the ATO — presumably from my first (legal) job serving fish and chips circa 2000, Hostplus from cooking entrees in a Chinese restaurant circa 2002, Asgard from my first job in an accounting firm circa 2006, a second Asgard account after moving to another accounting firm circa 2008.
The total: four accounts, charging three sets of fees and two funds with duplicate life insurance policies.
I was ashamed of myself for letting my superannuation get into this state. Years of neglect has cost me thousands of dollars.
I’m supposed to be a fiscally responsible accountant — the financial compass for my clients, if you will.
And so began my exploration into the world of superannuation. After consolidating my super into one fund, I did some digging into the historical performance and management fee structure of my current fund. I was getting absolutely taken for a ride.
It was time to make a change.
Spaceship(!)
Coincidentally, Paul Bennetts’ superannuation product, Spaceship was making headlines throughout various media channels. Spaceship is disrupting the superannuation industry.
“Invest where the world is going, not where it’s been”.
With 100% transparency, a ‘tech focused investment portfolio’ featuring businesses like Apple, Alphabet and Facebook and seed funding from local tech heroes like Michael Cannon Brookes, Spaceship immediately caught my attention. At last, a sexy fintech startup shaking up the stale, bland superannuation industry.
I’m a male, Gen-Y, early-adopter millennial. I’m a subscriber to TechCrunch, AngelList and Product Hunt. I’m an Elon Musk and Tim Ferriss fan boy.
Paul, you’re speaking my language…this is my tribe.
I was prepared to roll my super balance into this sexy, tech fund then and there! But I couldn’t. The product had just entered Beta and I had to sit on a waiting list because it was ‘oversubscribed’ with interest. This is super exclusive I thought to myself, it must be good.
The morning following my superannuation overhaul, I was speaking to my colleagues about my crisis and my Spaceship discovery. By sheer coincidence, two of our colleagues saw Paul Bennetts give a presentation on his fund at an event held at our co-working space. “Yeah, it’s cool, but it’s pretty expensive” was the consensus. After debating over the pros and cons of this fund, we made an internal project to conduct an analysis of the Spaceship product.
An assessment of Spaceship
Disclaimer: This article constitutes the author’s personal views only and is primarily for entertainment purposes. It is not to be construed as financial advice in any shape or form. Please do your own research and seek personal advice from a qualified financial advisor before shifting your superannuation.
Now that the ass covering is complete, let’s begin.
Specifications
· Spaceship GrowthX (very aggressive)
· Risk: Level 6
· Expected return and risk profile: High
· Investment Objective: CPI +2.5%
· Minimum investment period: 9 years
· Investment option: GrowthX only
Risk Profile
There are seven categories of investment risk. These categories will vary depending on the asset allocation of the fund. Level 1, being the most conservative, is typically comprised of fixed interest securities (bonds), term deposits and some property. Low risk, low yield.
Level 7 is the most aggressive, and largely comprises international and Australian shares.
Most funds provide members with a variety of investment classes to cater for their specific risk profile.
Spaceship, however, only has one Investment option, being its GrowthX fund with a Level 6 investment risk profile. What does that mean? Basically, it’s the ‘go hard or go home’ model. High risk, high return.
What does that look like?
In the GrowthX fund, the majority of the assets are international and Australian shares.
Bearing in mind that other established superfunds also offer ‘high growth’ risk profiles, the below graph compares Spaceship’s asset allocation against Australia’s top 6 Funds (by dollars under fund management) in the same Level 6 risk profile.
Comparing this asset allocation against the comparable funds within the Level 6 investment class, it is evident that the weighting towards Australian and international shares in Spaceship’s fund is slightly higher when compared to the Big 6.
An assessment of technology investments
Unlike its competitors, who still apparently invest in mining companies and big banks, Spaceship claims to be a ‘tech first’ superfund. Below is an infographic of the tech shares held in its portfolio.
For a benchmark assessment, we compared the Top 20 holdings in these tech companies against international shares held by the Big 6 funds.
Notice any similarities? Well, it appears that the Big 6 aren’t just investing in mining and banks after all. (NB: First State and Australian Super hold Tesla).
Also notable: we couldn’t find any data on Colonial or BT. Great transparency…
Fee Structure
Spaceship has publicly faced criticism from the media regarding its management fee structure — 1.60%, plus an additional $78 of admin fees per annum.
Now I know you’re probably thinking those fees seem okay. However, comparing them to the Big 6 paints a more telling story.
To provide context, 1%, could reduce your final return by up to 20% over a 30-year period (for example, reduce it from $500,000 to $400,000). That’s the magic of compound interest working against you rather than for you.
Investment Performance
As Spaceship is a startup, they have no track record as a fund.
Their performance benchmark is fairly low at CPI + 2.5% after fees and taxes.
By comparison:
· Australian Super has a benchmark of CPI + 4.5%
· QSuper: CPI + 4.5%
· BT Super for Life: CPI + 3.3%
· First State: CPI + 4%
· AMP Savings Trust: CPI + 3.5%
Note, these benchmarks are before fees and tax. It is not clear within the PDS whether Spaceship charges performance fees or not.
One very important point to note
Most (if not all) industry super funds have life insurance as a standard inclusion built into their fund.
Spaceship, however does not provide any insurance policies.
I’m sure the Spaceship onboarding team make this very clear in their signing-up process…but this is an important consideration to anyone looking to roll their super into Spaceship’s fund.
In Summary
Wiping away the clever marketing, hype and tech platform, the underlying Spaceship fund appears to be very average when compared to the Big 6 funds assessed in this blog. Time will ultimately tell whether it ‘outperforms’.
But let’s look at the positives. What Spaceship has successfully done is make super cool. It has raised the profile of a rather boring, complacent industry and is encouraging millennials to take control of their future.
If their goal is not to disrupt super, but rather raise the profile and highlight the importance of super amongst dis-interested and uninformed millennials, then they have nailed it.
That, in itself is invaluable.
Side note: You’re probably thinking ‘Who am I’ to write a post critiquing this super fund. I’m not a financial advisor. I’m not an investment banker. I’m certainly no Robert Kiyosaki.
And that’s exactly the point. You need to do your own research and seek independent help. This blog is to prompt you to spend time researching, investigating and exploring your super options. Super is designed for your future, so own it.
Special mention to Peter, Elizabeth and the SBO team who helped put this together.
