Best performing super funds of the past 10 years revealed

Australia’s strongest superannuation funds have returned twice as much as the weakest over the past 10 years.

Australian Prudential Regulation Authority (APRA) data show a 10-year rate of return of 8 per cent for the best performing funds, with some laggards returning only around 4 per cent. This could mean a difference in a retirement balance of as much as $200,000.

Four of Australia’s biggest super funds – Unisuper, Cbus, AustralianSuper and Hostplus – were among the six funds earning 8 per cent or more annually over 10 years.

Fifty of the 124 super funds examined had 10-year returns below 6 per cent.

Read more: You probably don’t have enough super

Past performance is not the only thing to consider when choosing a super fund. The level of fees charged, and information and insurance offered should be considered. It is also important to assess the different levels of risk involved in each fund – some invest very conservatively, others provide high-risk, high reward investment options.

Remember that investment results can vary from year to year. It is worth doing a little research, because a difference in average super performance of as little as 1 per cent “can create a massive difference in the amount you have when you retire”, reports canstar.com.au.

“That’s why when looking at a super fund’s past investment success, simply looking at a 12-month difference may not be enough. It can be a better idea to look at that fund’s performance over many years, which is something you’ll be able to find on your super statement.”

Industry site superguide.com.au cited a Productivity Commission (PC) example of the difference a good fund makes to a 21-year-old on a $50,000 starting salary.

“If they joined a super fund that is consistently in the top quarter of funds rated by performance, they could expect to retire at 67 with a super balance of $1.2 million. If instead they joined one of the super funds that is consistently in the bottom quarter of funds, they would retire with $560,000 – 54 per cent less.”

Comparison sites such as finder.com.au, reviewmysuper.com.au, superguide.com.au SuperRatings, Chant West, Morningstar, RateCity, SelectingSuper and canstar.com.au analyse super performance for periods from one to seven years. Many take advertising from superannuation funds, so it pays to check how they get paid in their ‘About us’ sections, usually at the bottom of their home page. You can then be more confident about the information provided and how to use the site to get the information you want.

Read more: Most people exhaust their super before they die

The government’s moneysmart.gov.au site also offers advice on how to choose a super fund and provides a super calculator so you can estimate how much you will have when you retire. It says to examine a fund’s investment performance over at least five years.

“Compare like with like. For example, only compare a balanced option with another balanced option, and try to use the same time period.”

It endorses some super comparison sites, but suggests you also peruse each company’s product disclosure statement. When making your choice, consider past performance, fees, insurance, investment options and services.

The PC review of super found fees were “the biggest drain on net returns”. It estimated that an increase of 0.5 per cent in fees would reduce the retirement balance of a typical worker (starting work today) by a projected 12 per cent (or $100,000), reports superguide.com.au.

Federal Treasurer Josh Frydenberg said the annual $30 billion cost of super fees exceeded electricity and gas bills combined. The government announced it would introduce its own online comparison tool called YourSuper, to commence on 1 July 2021.

Have you used super comparison sites? Will you use the government’s YourSuper site?

Read more: Funds fight for changes to reforms

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Written by Will Brodie



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