Is Spaceship Super the most expensive fund in the universe?
Some important disclaimers: This blog and its posts are written to educate Australians on their financials, anything in this post is solely general information and commentary. All of the information referenced and provided has been sourced from publicly available information and all attempts have been made to ensure everything is accurate. All information is current as of the publishing date of 18 January 2023, and may change in the future, it is important readers conduct their own research and ensure that any figures below remain current at the time they read. There is every chance the fees displayed and discussed may change in the future.
The two most important things with your super are the investments it holds and the fees it charges.
This blog post analyses the fees charged by Spaceship. It touches on Spaceship Super’s investments, but the focus is on the fees. I will discuss the investments in another blog post.
The gist of the post summarised in four dot points is:
For the GrowthX investment option, Spaceship charge 1.685% + $78 pa in Administration Fees & Costs alone, not including investment fees.
Both of the Spaceship Super options, including “GrowthX” and “Global Index” are more expensive than any of the 434 investment options and superfunds published on the APRA MySuper heatmap. There isn't a single fund or option on the list that costs as much.
Some of these Administration Fees & Costs, specifically the 0.965% of a member’s account balance, appear to be at least partially paid to another company “The Promoter of the Fund”, which is “Spaceship Capital Limited”.
In the 2022 Financial year, Spaceship Super paid Spaceship Capital Limited $2,014,934. This amount is declared in the relevant 2022 Audited Financial Statements.
Spaceship has received a lot of eye-catching press and some announcements since its flashy launch.
Whilst there is no shortage of expensive superannuation products on earth, Spaceship Super appears to be the only one which is truly out of this world.
Again, Spaceship is not alone, Australians pay over $30 billion dollars a year in fees on their super, but in a world with no shortage of high fees, Spaceship appears to stand out.
This blog post will unpack what makes Spaceship so expensive, what services are received for those expenses and where exactly the fees are going.
Artist’s rendition of the author of the blog
How expensive is Spaceship Super?
For the GrowthX option Spaceship Super charge 1.685% pa + $78 pa for Admin Costs. I will say that I am not aware of any superannuation product in Australia that carries higher administration fees than Spaceship Super, they may well exist, but I’ve not seen one.
In fact, both of the Spaceship options, including “GrowthX” and “Global Index” are more expensive than any of the 434 investment options and superfunds published on the APRA MySuper heatmap. There isn't a single one that costs as much, let alone more.
What makes Spaceship expensive?
The actual investments that Spaceship uses are actually incredibly basic, they’re essentially the financial equivalent of home-brand pasta. A bit more Deep Space Homer than Star Trek levels of fantasy.
Most of the investments they use are vanilla ‘passive’ investments, in the case of GrowthX, a combination of passive investments and a few ETFs.
Now, it’s worth noting that the “Global Index” option charges 0% in investment costs, so the only costs for those in that option are the admin costs, mind you, secondly, the “GrowthX" option charges 0.20%, which isn’t high by any comparison. However, this doesn’t justify nor explain the admin costs, because again, they’re ultra simple strategies and secondly, even with a 0% investment cost for “Global Index’, it is still more expensive than any of the 434 options and superfunds on the APRA MySuper Heatmap.
Now, ‘passive’ investing, and ETFs for that matter, are both totally fine, in fact pretty good and very rational ways to invest money.
The problem, is paying 1.685% + $78 pa in admin costs for these ultra-simple investments (GrowthX investment option). These admin costs are significantly higher than similar offerings.
I’ll address the actual investments that Spaceship use in another post, as they deserve a more thorough inspection, but it’s fair to say, they’re nothing special, and shouldn’t warrant such expensive administration costs, because it’s a very simple way to invest, so shouldn’t come with such expensive admin costs.
It’s worth noting Spaceship doesn’t actually manage any of the money directly themselves (not unusual at all), they but rather their two investment options, “GrowthX” and “Global Index”, are spread across a grand total of 7 separate ETFs and managed funds (not usual).
I’m not aware of any other superfunds offering only two investment options, again it’s highly possible they exist, but I don’t know of them. Generally speaking, only providing two options isn’t great, because it doesn’t account for different types of people, different stages of life and different tolerances for risk.
With fees, every bite counts
Put another way, Spaceship’s 1.685% + $78 admin (GrowthX option), when combined with its actual underlying investments, is kind of like paying for a lavish, Michelin-starred restaurant and then being served frozen pizza…There’s nothing wrong with frozen pizza, it can be great and can fill you up, but you shouldn’t pay fine dining prices for a simple easy-to-make meal. That’s not good value.
But let us move past the plastic cutlery of investment solutions and into the somewhat astronomical fees…
What are you getting for these fees?
The costs of Spaceship Super are almost completely derived from its Administration Fees. Spaceship Super for the GrowthX option, per their PDS, charges a total for admin of 1.685% + $78 pa, however, this combined fee is split into three separate fees;
Flat Fee of $1.50 per week ($78 per annum) - very normal and not overly high.
Plus 0.720% of the account balance per annum - high relative to some, but not unprecedented.
Plus 0.965% of the account balance per annum - unusual for there to be two % based fees.
GrowthX Option Fees, Spaceship Super - Product Disclosure Statement, Page 5
Now, ‘No 1’ is not unusual, in fact, it’s common with almost every super fund. No problems at all. These fees pay for things like the call centre, staff, the website, just keeping the lights on. Makes sense, totally normal.
The same with ‘No 2’, funds have costs. Now, Spaceship’s GrowthX fee of 0.720% pa is definitely higher than some (if not most), especially when most funds have a ‘tier’ where the % gets lower with higher funds, and secondly, it’s expensive considering the passive investment option & ETFs (a really, really simple product), but there is a basis for it.
Just the first two are not cheap admin, in fact, the first two fees alone - excluding the third - make Spaceship’s admin costs more expensive than the admin costs of any of the 434 investment options and superfunds in the APRA MySuper Heatmap for balances of $25,000 or above - this is not including the additional 0.965% pa.
This ‘No 3’ fee, the 0.965% of each account balance per annum, is the most interesting. It applies to both the GrowthX and the Global Index Option.
Spaceship Super - Product Disclosure Statement, Page 6
“This cost is not an additional cost”
Spaceship discloses the following with respect to the 0.965% cost:
Spaceship Super - Product Disclosure Statement, Page 5
What? “This cost is not an additional cost”. Yet it appears under fees and costs? “Not deducted directly from your account”. What? What the hell does this mean?
Well, to solve this mystery, we must consult the Trust Deed for Spaceship Super, which, technically is “Division IX” of “The Tidswell Master Superannuation Plan”.
This 312 page document is literally written in legalese. But, if you persevere until Page 244 and translate Clause 30.2 to English, you learn that essentially, the fees can be basically deducted from the value of your account, which apparently technically means they’re “not charged”.
Again, they are deducted from the value of your account, but they aren’t charged. Which to me, might change the avenue, but at the end of the day, the member of the fund is still paying for it.
Tidswell Master Superannuation Plan, Amendeding Deed, Page 244
Where are the fees going?
According to Page 5 of the Product Disclosure Statement, the No 3 fee, is “Paid by third parties throughout the year and not deducted directly from your account. This cost is not an additional cost to your account, but it is required to be disclosed.”
Now let’s confirm, Spaceship is a for-profit fund, it is designed to make money and turn a profit.
So, there is 0.965% of Admin fees that is required to be disclosed. Ok well, why? Who is it going to? What is it paying for? What did you receive in exchange for this fee? Who are these “Third Parties” what did they do to deserve almost 0.965% of your balance?
Well, on Page 12 of the 2022 annual report, Spaceship list the “Promoter” of the fund….
2022 Spaceship Super Annual Report, Page 12
Right ok, we’re not talking about a nightclub, but its good to know promoting isn’t dead. Just to confirm, Spaceship Capital Ltd whilst sounding awfully like Spaceship Super, is a different legal entity. I couldn’t find much more about Spaceship Capital Ltd in either the Annual Report, PDS or Reference Guide.
You tend to find all this good stuff in the Financials, which per Page 27 of the 2022 Annual Report, aren’t hard to find.
2022 Spaceship Super Annual Report, Page 27
A quick sojourn over to the above, a swift peruse through the 2022 Financial Statements, and a tasty inspection of Section 17, Related party transactions, down to (f) Other entities with significant influence over the Fund, on Page 27;
The Tidswell Master Superannuation Plan, Annual Financial Statements for 2022, Page 27
Spaceship Capital Limited (ABN 67 621 011 649) were paid $2,014,934 for the 2022 Financial Year.
So you're probably wondering, firstly what kind of work did Spaceship Capital Limited (do for over $2 million of pay? And secondly, who exactly is Spaceship Capital Limited?
Well, remember the 0.965% pa under Admin Costs, which are deducted but not charged?
Well, if we go back to our friend the Trust Deed, we can see that, one of the eligible elements of these “Liabilities”, on Page 244, in Part 8 - Fees, under clause 33. Fees and Charges, under (f) are Promoter Fees.
Tidswell Master Superannuation Plan, Amendeding Deed, Page 244
So, therefore, it would be fair to say, that presumably some of the 0.965% fees paid, could make up the $2,014,934 which was paid to Spaceship Capital Limited in the 2022 Financial Year in exchange for them acting as the “Promoter” for the fund.
I will say that I have no knowledge on what services a “Promoter” provides to a superfund and that prior to writing this blog, I didn’t realise such a thing existed within superannuation funds.
There is not a whole lot of detail that explains what kind of work Spaceship Capital Limited is undertaking in exchange for the millions of dollars it's extricating from its members.
However, like any reasonable person spending their Sunday afternoon trawling through trust deed and annual reports, I was intrigued. So in an effort to understand further, I went onto ASIC Connect and paid the $44 flat fee to view Spaceship Capital Limited’s 2022 Financials. Which, provide the below with respect to revenue paid from Spaceship Super to Spaceship Capital Limited.
Spaceship Capital Limited, is very interesting, because it gets payments not just from Spaceship Super, but also from Spaceship Voyager, the Investment offering, however, this post relates solely to the superannuation product. I’ll do another post on Spaceship Voyager.
Spaceship Capital Limited, 2022 Financial Statements, Page 15, Notes to The Financial Statements, Note 4: Super Revenue. Source: ASIC Connect.
Now again, financial accounting is tricky and this can be confusing, but, it looks like that of the $2,081,711 declared as “Super Revenue” (meaning from Spaceship Super) for the 2022 Financial Year, (I know this number is different to the $2,014,934 declared in the Spaceship Super Annual Reports), that $1,341,592 is declared as “Promoter Fees revenue” and $740,119 is “Administration Fee Revenue”.
Again, in the same clause 33 of the Trust Deed, where we identified “(f) Promoter fee” also is “(d) Administration fee”.
Page 3 of the 2022 Spaceship Capital Limited Statements appears to give some explanation as to the difference between the two:
Spaceship Capital Limited, 2022 Financial Statements, Page 3, Principal activities. Source: ASIC Connect.
All of this gets very complicated, I think the most important thing to say, is that Spaceship Super’s 2022 Annual Statements declared payments of $2,014,934 to Spaceship Capital Limited.
Further, Spaceship Super members in the GrowthX option pay 1.685% + $78 pa in administration fees, it seems some of this makes up the funds paid to Spaceship Capital Limited. This admin fee is higher than any of the 434 separate options & superfunds in the APRA MySuper Heatmap as at the time of writing.
Curious Google Reviews
In writing this post, I had a peruse of Spaceship’s Google Reviews. Now these reviews appear to come under Spaceship Voyager I couldn’t help but notice that of 100 reviews, at the time of writing, 20 contained “Referral Codes” posted by the reviewer themselves.
Example of Google review containing “Referral code”
I must say I’ve not seen this before in my personal experience and lets confirm that Spaceship is not just a Superfund but also an investment service, which can offer such incentives (aka a referral bonus). However, I was definitely surprised to see so many, circa 20% of reviews.
It’s worth noting that these reviews appear to be posted by users of the services as opposed to Spaceship and are posted by reviewers, not the fund or company itself.
Summing up
So in summary, Spaceship are levying what appears to be high administrative costs versus that of other superfunds, in the process of which, are paying millions of dollars (in the 2022 financial year) to the promoter, Spaceship Capital Limited. All the while providing very simple, easily replicated investment solutions (in the case of the index option at zero fees).
There’s nothing wrong with charging a fee, it costs money to run a super fund the same way it costs money to run any kind of business. What is important, is how those fees compare to your peers, what services you’re providing in exchange and how transparent those arrangements are.
Finally, what appear to be ‘small’ percentages like 0.965% matter. Accordingly to Page 17 of Spaceship’s own Reference Guide:
Spaceship Super - Product Disclosure Statement, Page 5
An extra 1% in fees could cost you 20% of your total balance over a 30-year period in missed earnings and fees.
And let’s get one thing straight, the money in Spaceship Super belongs to the members of Spaceship Super.
My name is Andy Darroch, I run Independent Wealth Advice, I’m a self-hating financial adviser, I’m not a big fan of the wealth management industry, and I like to write about finance.
You can contact me at andy@iwadvice.com.au or book in a time to chat with me via our site,
Andy
