The 40 worst performing superannuation funds hold $5.5 billion and charge Australians a staggering $117 million in fees each year.
Online investment adviser stockspot.com.au has released its eighth annual Fat Cat Funds Report, revealing the worst performing and best performing funds for 2020.
The research found that fees and poor performance could result in individuals losing up to $200,000 by the time they reach retirement age.
AMP, which has been listed in the worst-performing funds for every year the report has been compiled, topped the list as the worst fund this year, followed by OnePath and Macquarie.
Stockspot measures a poorly performing fund (what it terms a Fat Cat fund) as one that has been in the bottom 10 performing funds within a particular risk group (balanced, growth, etc) over five years.
A good investment fund is one that is in the top 10 funds within a risk group over the same period of time.
Not only did AMP top the list of the worst investment funds, it also made history by being the first Fat Cat fund to deliver a negative return over five years with one of their options delivering a total return of -2.2 per cent.
AMP (12) and OnePath (11) account for more than half of the top 40 worst-performing funds.
According to the Stockspot research, a typical Fat Cat fund charges 2.13 per cent in fees while a typical Fit Cat fund (referring to a strong super investment option) charges 0.97 per cent.
Unisuper was recognised as having the most top performing super funds over five years (seven), followed by IOOF (five) and Australian Super (four).
Report author Chris Brycki said the one thing that the best performing super funds had in common was that they all charged less than 1 per cent in fees per year.
“Superannuation is the biggest investment most Australians have, yet most people have no idea how much they stand to lose if they’re in a Fat Cat fund,” Mr Brycki said.
“One of the golden rules of superannuation is: the less you pay, the more you get. Always pay less than 1 per cent p.a. in fees so your super isn’t eroded by high fees.
“Unfortunately, there are almost twice as many high-fee funds (more than 1 per cent p.a. in fees) than low fee funds (less than 1 per cent p.a. in fees).”
Mr Brycki also notes that people can be reticent to change, and even when they know they’re in a Fat Cat fund, prefer to turn a blind eye than spend the 10 minutes required to save themselves serious cash in the future.
“Sadly, in the eight years of naming the worst performing Fat Cat funds, few people have moved out of these funds,” he explained.
“Retirement may seem a while away, but when you get there and realise you could have been $200,000 richer, it won’t be a good feeling.”
Do you have money invested in an AMP or OnePath super fund? Are you now worried about what your nest egg will look like in retirement?
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