Mirror, mirror… what super fund is the best-performing fund of all?

Note: SuperGuide updates this article periodically with the latest performance and super fund data. You can discover the best value superannuation fund of the year for 2013, the super (pre-retirement) fund of the year for 2013, and the pension (retirement) fund of the year for 2013. You can also discover the top 10 performing super funds over 5 years. Latest article update was 2 November 2012.

Asking experts and rating agencies for the answer to what super fund is Australia’s best-performing fund can be compared to the vain stepmother in the fairy tale Snow White asking the magical mirror: ‘Mirror mirror on the wall, who in the land is the fairest of all?”. The answer on one day may be: “You, my queen, are fairest of all” while another day it is likely to be: “Queen, you are full fair, ’tis true, but Snow White is fairer than you.”

The dilemma when seeking out ‘the best’ is that the answer also depends on who you’re asking, what you’re asking, and even when you’re asking such a question. Do you want to know the top performer for the past month, three months, 12 months, or the top fund over a period of 3 years, 5 years or 10 years? Are you seeking the best performer before fees, or after fees? Do you want to know the best performer after taxes have been deducted, or after both fees and taxes have been deducted?

Are you comparing like with like? For instance, a super fund investment option that invests only in cash investments will usually have a very different investment return to a super fund investment option that invests 100% of its money in Australian shares or international shares.

Alternatively, when you’re thinking of the best fund, you may be seeking a fund that provides the cheapest fees, or the best value life insurance or the most flexible pension options.

Every month, and each quarter, the daily newspapers report the top-performing super funds for the month or quarter. The data is usually sourced from one of the rating agencies, including:

• Chant West
• SuperRatings
• SelectingSuper
• MorningStar

You then need to differentiate the top-performing funds from what rating agencies consider to be the ‘best’ super funds. The ‘best’ super fund tag applied by a rating agency is not necessarily the super fund with the highest performance in a particular year or month, and what is ‘best’ can vary depending on what is used as a measurement.

How did your super fund perform?

In this article we publish some exciting information for those readers interested in hard data on the top all-rounder super funds, and the winners in the investment performance stakes, courtesy of rating company, SuperRatings. Continue reading to discover the following information:

• Best value for money super fund of the year for 2013 (across both super accumulation and pension drawdown phases)
• Top 10 super funds in Australia (based on 400 criteria including investment, fees, insurance, service delivery) for accumulation phase, including the winning super fund
• Top 10 pension funds in Australia, including the winning pension fund
• Top 10 super fund performers (balanced investment option) for 5 years to June 2012
• Top 10 super fund performers (balanced investment option) for 5 years to December 2011

Note: You can also read about the latest performance figures over 1, 3, 5, 7 and 10 years for the different investment options available, and the latest data on the top-performing super funds in the article Investment performance: We’re the best super fund. No we’re the best…

Tip: If you run a self-managed super fund (SMSF) you can use the investment returns of the large super funds as a benchmark for your own fund’s investment performance. Are you outperforming the large super funds with your asset allocation?

And the award goes to…

On 25 October 2012, ratings agency SuperRatings, announced the Super Fund of the Year for 2013 (across both accumulation phase and pension phase), and the top super fund (accumulation) and the top pension fund for 2013.

SuperRatings reviewed over 300 pre-retirement products and 150 pension products to determine the winner.

The winner of SuperRatings’ Fund of the Year for 2013 is SunSuper. According to SuperRatings, SunSuper is the best value for money fund on an aggregated basis, across both superannuation accumulation and pension drawdown phases. SuperRatings CEO, Nathan McPhee said: “SunSuper received the award based on solid investment performance and competitive fees as well as being market leaders in relation to engagement, advice, and communication for, and with, members.

“[Although] there are a number of excellent superannuation funds, SunSuper continues to be a leading provider of end-to-end retirement solutions with an outstanding accumulation product, near seamless transition to retirement service, coupled with a well-tailored pension offering.”

According to SuperRatings, Sunsuper accounts for almost 1 in 10 working Australians.

The winners for the separate awards of top super fund and top pension fund are detailed below.

Top 10 super funds

SuperRatings evaluated hundreds of super funds based on 400 different criteria (including investments; fees; insurance; service delivery; member education; financial planning facilities; employer support; and fund governance).

In alphabetical order, the top 10 finalists for top super fund (accumulation phase) for 2013 are:

• AUSCOAL Super
• AustralianSuper
• CareSuper
• Catholic Super
• HESTA Super
• HOSTPLUS
• LGsuper
• QSuper
• Sunsuper
• Telstra Super

And the winner is… AustralianSuper. According to SuperRatings, “As Australia’s largest industry super fund… provides a strong environment for accumulating wealth. The addition of the Member Direct option, allowing accumulation members to invest directly in ASX shares, [exchange traded funds] and term deposits, is well regarded and currently unique within an industry fund.”

Top 10 pension funds

In alphabetical order, the top ten pension funds for 2013 are:

• AMP Flexible Super Retirement Pension
• AustralianSuper Pension
• BUSS (Q)
• Catholic Super Pension
• Club Plus Pension
• HOSTPLUS Pension
• OnePath OneAnswer Frontier Pension
• REST Pension
• Russell Private Active Pension
• Sunsuper Retirement Pension

And the winner is… HOSTPLUS Pension. According to SuperRatings, “HOSTPLUS Pension received the award based on providing outstanding value across key assessment areas. With excellent investment performance, competitive fees, strong product flexibility and unique service offering, it provides exceptional value for members”.

Taking a balanced approach – investment performance

If you’re looking solely at investment performance, then the ‘best’ fund award depends on what type of investment option is involved, and whether you are looking at performance over 12 months, 3 years, 5 years or even 10 years.

More than 80% of Australians have their super money invested in a balanced (sometimes described as ‘growth’) investment option, which generally involves between 60% and 80% of growth-style assets, such as shares and property, and 30% to 40% in more conservative investments, such as cash and fixed interest. Some ‘balanced’ investment options resemble ‘growth’ options, holding 80% or more of assets in growth-style investments.

For example, SuperRatings classifies a ‘balanced’ investment option to be holding 60% to 76% in growth investments while another rating agency, ChantWest, classifies ‘Balanced’ to be an investment option with 41-60% of assets in growth investments. Chant West considers an allocation of 61 to 80% in growth assets to be a ‘growth’ option.

In short, the terms ‘balanced’ and ‘growth’ are sometimes interchangeable, and you should always check the asset mix of any investment option that you’re considering or that you currently use. Your super fund’s default investment option is likely to be a balanced or growth allocation.

The two tables below list the top 10-performing balanced options within super funds for:

• 5-year period to 30 June 2012
• 5-year period to 31 December 2011

Note: Displaying performance figures for different timeframes (for example, to June 2012, and to December 2011) highlights the fact that a particular super fund may be the top performer in one period and further down the performance list in another period. The meagre performance displayed in the 5-year average returns between the June 2012 figures and the December 2011 figures highlights the current volatility of the markets. The key when measuring the performance of a super fund is consistent long-term returns over extended periods which means the best long-term performer over longer periods may not necessarily be the top performer in any one or more periods.

Top 10 balanced options over 5-year period to 30 June 2012

According to SuperRatings, the top 10 super funds based on the ‘balanced’ option (investment options with between 60% and 76% in growth-style assets) over the 5-year period ending 30 June 2012 are:

Top 10 Balanced (60-76) – annual returns for 5 years as at 30 June 2012
Fund Investment Option	Option Type	Return Period	Return (% p.a)	Rank
ESSSuper Accum – Balanced	Balanced (60-76)	5 year	2.71%	1
LGsuper Accum – Conservative Balanced	Balanced (60-76)	5 year	2.59%	2
CommonwealthBank Group Superannuation Plus – Mix 70	Balanced (60-76)	5 year	2.45%	3
FSS – HealthSuper Division – Medium-Term Growth	Balanced (60-76)	5 year	1.99%	4
QSuper	Balanced (60-76)	5 year	1.8%	5
REST – Core Strategy	Balanced (60-76)	5 year	1.74%	6
Acumen – Core Strategy	Balanced (60-76)	5 year	1.74%	7
GESB Super –Balanced Conservative Plan	Balanced (60-76)	5 year	1.55%	8
CareSuper –Balanced	Balanced (60-76)	5 year	1.15%	9
AMG Universal Emp – Balanced	Balanced (60-76)	5 year	1.14%	10

Table note: All results are net of fees and tax and are for the 5 years ended 30 June 2012. Past performance is not a reliable indicator of future performance.

Source: SuperRatings

Note: If you have actively chosen an investment option, then your super money may not be in a balanced investment option. You will need to do a little more research to uncover the performance data for super funds that have invested in a similar asset allocation to yourself.

SuperRatings provides some performance data (free of charge) on super funds and pension funds. You can visit the SuperRatings website (www.superatings.com.au) for more information.

Top 10 balanced options over 5-year period to 31 December 2011

According to SuperRatings, the top 5 super funds based on the ‘balanced’ option (investment options with between 60% and 76% in growth-style assets) over the 5-year period ending 31 December 2011 are:

Top 10 Balanced (60-76) – annual returns for 5 years as at 31 December 2011
Fund Investment Option	Option Type	Return Period	Return (% p.a)	Rank
CBA OSF Super – Mix 70	Balanced (60-76)	5 year	3.0%	1
LGSuper Accum – Conservative Balanced	Balanced (60-76)	5 year	2.9%	2
REST – Core Strategy	Balanced (60-76)	5 year	2.2%	3
FSS- Health Super Division-Medium-Term Growth	Balanced (60-76)	5 year	2.2%	4
CareSuper –Balanced**	Balanced (60-76)	5 year	1.7%	5
Catholic Super – Balanced	Balanced (60-76)	5 year	1.7%	6
Buss (Q) –Balanced Growth	Balanced (60-76)	5 year	1.6%	7
NGS Super Diversified	Balanced (60-76)	5 year	1.5%	8
Local Super – Growth Option	Balanced (60-76)	5 year	1.4%	9
TasPlan – Balanced	Balanced (60-76)	5 year	1.1%	10

Table note: All results are net of fees and tax and are for the 5 years ended 31 December 2011. Past performance is not a reliable indicator of future performance.

Source: SuperRatings