Superannuation: industry or retail fund?

Have you ever wondered why some super funds outperform others?

Australian money AUD with calculator notebook selective focus toning copy space background

Have you ever wondered why some super funds outperform others? Or what exactly makes an industry fund different to a retail fund? An understanding of how each type of fund operates is the first step to help you choose which one is right for you.

Industry funds
Industry funds evolved from the wishes of unions and industry leaders who believed an income in retirement wasn’t just for the wealthy and fought for their members and employees to have access to super. Historically, these funds were exclusive to specific industries but now, more often than not, these funds are open to everyone as ‘public offer’ funds. They are often referred to as not-for-profit funds because all profits made through investment of members’ superannuation savings are reinvested into the fund to ultimately benefit the member. Industry funds do not pay commissions to financial planners and fees are there to cover the cost of running the fund only, so generally boast low fees.   

Retail funds
Not to be confused with an industry fund for the retail sector, banks and financial institutions, such as insurance companies, developed retail funds as a way of investing their clients’ money for retirement. Although the initial customer base was generally wealthier, white-collar workers, these funds have always been open to anyone. Retail super funds are attractive for those who may want their super managed alongside their other financial products, or who seek a wider range of investment capabilities. As a result, these funds are often recommended by planners as part of an overall investment review and they receive commissions or bonuses from the fund. Retail funds provide investment returns to members, as well as deliver profit to shareholders, and as a result, fees may be higher than industry funds.

So, how does the performance of these funds compare?
Each individual fund will offer different returns, regardless of whether it is an industry or a retail fund, but over the last 10 years, industry funds have delivered stronger investment returns (based on a balanced investment option)*. While many people focus on either returns or fees when comparing super funds, it’s essential that you actually consider the net benefit (calculated as the investment return net of all fees and taxes) a fund offers to members over an extended period of time, such as 10 years. It’s important to remember that historical performance is not an indicator of future performance but comparing returns over different investment mixes, and time periods, is just one way to help you make an informed decision about where to invest your hard-earned money.

What are the typical investments of each type of fund?
Both retail and industry fund investments will include a mix of shares (both Australian and overseas), listed property, infrastructure and private equity. However, both types of funds usually allow you to choose your own investment mix to suit your appetite for risk.

What does this mean for returns?
Superannuation is a long-term investment – primarily to support members’ retirement needs – where the investment performance cannot be considered in isolation. Administration fees, insurance and advice services are also factors that you should consider when making any decision about who looks after your retirement finances.

To find out more about how AustralianSuper compares to other funds, visit

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This article has been sponsored by AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, the Trustee of AustralianSuper ABN 65 714 394 898. The views are of YourLifeChoices and not those of AustralianSuper. The article contains general information and you should consider your personal financial situation before making a decision. 

*Superratings, YourLifeChoices Retirement Update June 2015


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    Tom Tank
    13th Oct 2016
    I hope any comment made doesn't start banging the anti-union drum when discussing industry funds.
    Their management is joint between business leaders and unions.
    13th Oct 2016
    My super was with an industry fund and on retirement it is still in A retail industry fund. They are well managed and returns have been good until this year.
    I looked at Bank funds, but their net return did not match my fund.
    Old Geezer
    13th Oct 2016
    Ooops some pretty ordinary returns here. Not one double digit one.
    14th Oct 2016
    Re pretty ordinary returns here. Not one double digit one.
    Was that related to Australian Super or another fund ?
    16th Oct 2016
    NEVER EVER withdraw your Super and put it in a bank, many have done so and now have regret and woe for they get next to nothing in interest; as they watch their savings dwindle away.

    On the other hand earnings from a Super Income Stream can perform really well, 10's of 1,000's over the past 5 years for me and I did not have much in the fund at all, but I now have more than when I started and have been paid those 10's of 1.000's over the years, plus the full single aged pension.

    And that's from First State Super, and performance over long time, I lost funds in the GFC, as did most fund members, but since then slowly and surely regained that, folks need to learn Super does well over the long term

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