Australia’s best super funds
Tuesday, 13 November 2007
Last Updated: Tuesday, 13 November 2007
By Michael Laurence
Choose the best super fund for you, and protect your interests if rolling your super into a new fund, by following SmartCompany’s guide to finding Australia’s top super fund.
At a gala dinner tomorrow night, super fund researcher SuperRatings will announce its super fund of year, with the most likely winner being a low-cost, high-performing industry fund with excellent insurance options.
Nine of the 10 finalists are industry funds; just one is a corporate fund. In picking its finalists, SuperRatings has compared such factors as investment performance, fees, insurance, member services, member education, fund governance, and the availability of financial planning if required.
The high-performing Telstra Super Fund is the only non-industry fund among the finalists.
Significantly, all but one of the industry funds on SuperRatings’ short-list for fund of the year is open to the public. These are AGEST, AustralianSuper, CARE, HESTA, HOSTPLUS, MTAA, REST and Sunsuper.
On performance terms alone, industry funds dominate their retail rivals. In the 12 months to 30 September (the latest figures available), eight of the top 10 performers for their balanced portfolios were industry funds, according to SuperRatings, led by Catholic Super with 19.6% followed by MTAA Super with 19.1%.
Telstra Super was the only corporate fund among the top 10 performers with a return of 18% for the 12 months to September. And AMP CustomSuper-Balanced Growth was the only retail fund in this select group, with a return of 17.1%.
(SuperRatings classifies a balanced fund as one with 60–75% of its assets in growth investments, the most common examples being shares and property, with the remainder in such investments as bonds and cash.)
“The reality is that over the past five to seven years, industry funds have outperformed retail funds,” says Jeff Bresnahan, managing director of SuperRatings. This out-performance doesn’t even count their outstanding fee advantage over the vast majority of retail funds.
And once the fee advantage of industry funds is included in the calculations, the returns of most retail funds have lagged way behind most industry funds.
Alex Dunnin, research director for another fund rating agency SelectingSuper, says that the main reason industry funds have been able to outperform retail funds – again without counting their fee advantage – is their willingness to invest in alternative assets such as private equity and infrastructure.
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