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Spaceship Super Navigates Towards the Naive

13 Jun 2017 12:04 PM -

If you haven’t heard of Spaceship Super yet, you probably aren’t part of the target demographic – young and naïve.

Spaceship is the latest entrant into Australia’s superannuation space and it’s targeting young investors with a marketing campaign suggesting they should “invest where the world is going, not where it’s been”. The key idea behind this marketing tag (and the fund itself) is young people need to have more of their super invested in technology companies.

To use a sci-fi movie analogy, Spaceship Super would be the one where characters take a journey into deep space requiring them to be in stasis for 40 years – when they wake up things aren’t quite what they expected.

Is our super worth a million bucks yet?

Underneath the marketing Spaceship has little to get excited about. It’s a one size fits all super fund with (per their website) 34% invested in technology companies like Google/Alphabet, Facebook, Amazon, Telstra, Microsoft, IBM, Intel etc, with the rest in large names in Australia and overseas. The asset allocation shows 47% international shares, 40% Australian shares, 6% Australian listed property, 5% Australian fixed interest and 2% cash.

The fees are a hefty 1.6% plus an admin fee of $78, so on a balance of $50,000 the fee is 1.75%. While the fund’s target return is an uninspiring 2.5% over inflation, which would be the target return on a low risk conservative fund. Meaning young investors would be paying a premium on their likely small balances to invest in a highly aggressive (93% risk assets) fund that is targeting a mediocre return.

Some criticism of the fund has mentioned the danger of being heavily exposed to one sector, in this case technology. While the fund certainly isn’t diversified enough, it appears more marketing hype on Spaceship’s part rather than full blown concentration risk. The tech companies in Spaceship’s fund are established names found in major world share indices.

So, to add insult to ignorance, an investor excited about investing in many of the tech companies mentioned could give themselves greater exposure by using low cost US and international managed funds or ETFs that are available in most superannuation platforms.

Apple, Microsoft, Amazon, Facebook and Google/Alphabet are all in the top 10 holdings of US and International share indices. Look further through those indices and you’ll find more of Spaceship’s noted technology companies – many that have been in existence for decades. This is hardly uncharted territory.

View Spaceship’s other equity holdings and it’s clear their marketing of “not investing where the world has been” further falls away. All those ‘old world’ companies like Commonwealth Bank, BHP, Woolworths and Woodside Petroleum are as prominent as the technology companies. Many of which, such as Intel, Telstra and Texas Instruments, are long established names.

Another of Spaceship’s messages is “we believe you should know where your Super is invested. It’s time to start becoming more informed about your Super”.

Yet Spaceship won’t disclose the exact funds they use. This is because it would become clear what Spaceship’s cut is. However, as noted, Spaceship has given enough away in their marketing that anyone wanting to move closer to Spaceship’s portfolio construction could do so within their existing super platform using funds they already have access to.

And it would cost at least 50% less.

So, if an investor was informed or wanted to know more about their super, they would quickly find out Spaceship would be an expensive ride in economy class.

If nothing else, Spaceship has been a study in financial marketing. Australian tech billionaire Mike Cannon-Brookes has fronted their campaigns – along with being an early investor in the business. While the message has implied this is a smart alternative to investing in Grandpa’s boring super fund.

Anyone under 40 using Facebook has been blasted by their targeted ads and they’ve tried to give the impression of demand by asking people to join a waiting list. Something reminiscent of when property spruikers hire people to sit in deck chairs outside their latest development then call the media and say “look at all the people lining up to buy our apartments”.

Still, Spaceship is boasting they already have $100 million committed to the fund.

A lot of money that clearly doesn’t follow Spaceship’s maxim that people should be more informed about their super.

This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.

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