Is Cash performance overlooked by fund managers?

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Could it be true that for a number of funds (including super funds) that it's all about the appearance of beating the benchmark but not necessarily about achieving the best outcome.

 

With regulators starting to examine practices at the various regulated sectors, and asking questions about performance versus reality, is this another itch waiting to be scratched?

 

 

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The following is an excerpt from an article by State Street, (Benchmarking Your Cash) "The overarching goal of a traditional cash product is to preserve principal and provide liquidity. As such, they do not tend to have benchmarks in the more traditional sense, where a portfolio’s aim may be to match or exceed the performance of its benchmark index. The benchmark rate or index chosen for a cash product is more indicative in nature,.....and it would seem that various benchmarks are used including SOFR (Secured Overnight Financing Rate), T-Bill Rates (U.S. Treasury Bills), Fed Funds Rate, BSBY (Bloomberg Short-Term Bank Yield Index), Money Market Funds and Money Market Fund Indices, BBSW

 

So as very simplistic example. With current BBSW rates are around 4.38% it is relatively easy to source a cash or time deposit rate well above the BBSW.

But using the fund manager performance benchmarking, if they achieve above BBSW, they would be "beating the benchmark" but in fact, with they are under-performing relative to what actual rates are available in the market.

 

The potential range of the yield left on the table can exceed 1% (depending on factors such as risk etc.)

So, the question must be asked whether just beating the "benchmark" is acting in the best interest of investors?