Good versus bad fund performance
The importance of choosing the right super fund The extraordinary disparity between the best performing products and the worst shines a blinding light on something we’ve been banging on about for a while. Being in the wrong fund or the wrong option type is more critical than how the market is performing month by month. Need proof?
The importance of choosing the right super fund
It’s expected that results will show the average Balanced options delivered an estimates 9.6% returns for their members last year. That’s seven percent above inflation and a good result. However it pales beside the returns enjoyed by member’s in one super fund’s Australian shares option. They earned a massive 37.4% last year. At the same time, members unlucky - or silly - enough to have their super in another fund’s Property option lost 9.6% in the same period.
If each member had started with $100,000, the difference in their balances would be a staggering $45,000 after just 12 months.
So, have we got your attention now?
These are volatile times for super. Choosing the best product has never been more important than it is right now.
Here’s a snapshot of the performance of the best, worst and average funds in seven option types (as at the end of April).
| Option Type | Highest | Top Quartile | Median | Bottom Quartile | Lowest |
|---|---|---|---|---|---|
| Balanced (60%-76% Growth) | 22.1% | 18.0% | 15.6% | 13.2% | 0.2% |
| Growth (77%-90% Growth) | 25.4% | 22.0% | 18.6% | 16.5% | 12.3% |
| Australian Shares | 37.4% | 31.9% | 29.9% | 28.9% | 20.8% |
| International Shares | 28.3% | 19.5% | 13.4% | 7.2% | 3.6% |
| Capital Stable | 16.1% | 12.3% | 11.0% | 9.4% | 1.7% |
| Property | 48.9% | 33.8% | 18.2% | -0.4% | -9.6% |
| Cash | 5.7% | 3.7% | 3.1% | 2.9% | 1.2% |
Look at the median performance first of all. This is the average of either 25 or 50 representative funds products in each option type. It shows that the average Cash investment managed a little over inflation, whilst the average Australian shares option nudged 30%. The rest of the options did pretty well in the past year also.
Now look across the rows and what’s blindingly obvious is the huge gap between the best and the worst -
| 22% | vs | 0.2% |
| 25% | vs | 12% |
| 37% | vs | 21% |
| 28% | vs | 4% |
| 16% | vs | 2% |
| 49% | vs | -10% |
| 6% | vs | 1% |
At 0.2% return, the worst Balanced option did nothing last year. In reality it went backwards - once inflation and fees are considered.
$22,000 IN YOUR POCKET FOR DOING NOTHING
The best Balanced option added $22,000 to a $100,000 super balance in 12 months. That’s $22,000 that super members earned without doing a thing. Well, almost nothing. They had to select that fund in the first place.
Some people find super dull. And it is. But it’s also going to be providing you with your income for fifteen or twenty years. And that makes selecting super as important a decision as choosing your career earlier in life.
If you think that finding the best super fund is a chore, you obviously haven’t spent much time exploring the tools and the research and advice available. All the work has been done for you.
Here’s how to find a better fund:
To compare your present fund with a couple of others that interest you, use RateMySuper.
To find the best performing funds, use the Top 10 Performance table.
To find the funds with the lowest fees, use Top 10 Fees.
To search the full list of hundreds of fund products - and view ratings and awards, visit the Supermarket.
To read snapshot reports on any fund, see Fundamentals.
For help in sorting out your super, get our unbiased Advice.
Savvy Gold membership costs $1.50 a week. If it helps you find a fund that can earn you an extra $22,000 next year, you’d have to say that was good value.
So what are you waiting for?
Start shopping.
Disclaimer: SuperRatings Pty Limited holds Australian Financial Services Licence No. 311880. Any advice provided here is of a general nature and does not take into account your individual financial situation, objectives or needs. It is not guaranteed to be accurate or complete. Information has been prepared without taking into account your individual financial objectives, situation or needs. You should, before acting on the information, consider its appropriateness having regard to your own financial objectives, situation and needs and consider obtaining personal financial advice from a financial adviser. Before you make a decision regarding any of the products mentioned, you should obtain and consider a copy of the relevant Product Disclosure Statement from the product issuer.