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 2014, the super (pre-retirement) fund of the year for 2014, and the pension (retirement) fund of the year for 2014. You can also discover the top 10 performing super funds over 5 years to 30 June 2014. Latest article update was 30 July 2014.

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, 7 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:

You then need to differentiate the top-performing funds from what rating agencies consider are 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 also 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 2014 (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 1 year to June 2014
  • Top 10 super fund performers (balanced investment option) for 3 years to June 2014 

Note: If you’re seeking investment performance information only, then scroll down to the second half of this article. 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 21 October 2013, ratings agency SuperRatings, announced the Super Fund of the Year for 2014 (across both accumulation phase and pension phase), and the top super fund (accumulation) and the top pension fund for 2014.

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

The winner of SuperRatings’ Fund of the Year for 2014 is REST, an industry super fund. According to SuperRatings, REST Industry Super is the best value for money fund on an aggregated basis, across both superannuation accumulation and pension drawdown phases. SuperRatings CEO, Nathan McPhee said: “Whilst many funds continue to improve their offerings, REST industry super fund stood out as a fund that had provided its almost 1.9 million members with extremely strong long-term investment returns and competitive fees. This was well supported by additional services including solid administration and governance, complemented by strong education and advice strategies, which are helping to increase knowledge and engagement amongst its membership base of mainly younger 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 2014 were:

  • AustralianSuper
  • CareSuper
  • Catholic Super
  • First State Super
  • HESTA Super
  • HOSTPLUS
  • QSuper
  • REST Industry Super
  • SunSuper
  • Telstra Super

And the winner is… Telstra Super, a corporate super fund looking after 100,000 members and managing $13.5 billion in assets.

Top 10 retirement/pension funds

In alphabetical order, the top 10 pension funds (out of 150 pension products) for 2014 were:

  • AUSCOAL Super
  • AustralianSuper
  • BUSS (Q)
  • Catholic Super
  • Club Plus
  • HOSTPLUS
  • QSuper
  • REST Allocated Pension
  • Russell Private Active Pension
  • Sunsuper Retirement Pension

And the winner is… REST Allocated Pension, a pension product offered by REST industry super fund – a super fund that looks after 1.9 million members and $27 billion in assets.

Investment performance: Taking a balanced approach

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, sourced from SuperRatings, list the top 10-performing balanced options within super funds for:

  • 1 year period to 30 June 2014
  • 5-year period to 30 June 2014 

Note: Displaying performance figures for different timeframes (for example, 1 year and 5 years to 30 June 2014) 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 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.

Note: The ‘balanced’ option performance tables in this article (tables supplied by SuperRatings) differ from the performance tables in the SuperGuide article ‘Investment performance: We’re the best super fund. No we’re the best…’, (tables supplied by Chant West) due presumably to the differing definitions of ‘balanced’ and ‘growth’

Top 10 balanced options over 1 year to 30 June 2014

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 1-year period ending 30 June 2014 are:

Top 10 Balanced (60-76) – annual returns for 1 year as at 30 June 2014
Fund Investment Option Option Type Return Period Return (% p.a.) Rank
Telstra Super – Balanced Balanced (60-76) 1 year 15.8% 1
Intrust Super – Balanced Balanced (60-76) 1 year 14.0% 2
UniSuper – Balanced Balanced (60-76) 1 year 13.9% 3
AustralianSuper – Balanced Balanced (60-76) 1 year 13.9% 3
Vision Super – Balanced Growth Balanced (60-76) 1 year 13.7% 5
VicSuper FutureSaver – Balanced Option Balanced (60-76) 1 year 13.7% 5
HOSTPLUS – Balanced** Balanced (60-76) 1 year 13.6% 7
Energy Super – Balanced Option Balanced (60-76) 1 year 13.5% 8
Cbus – Growth ** Balanced (60-76) 1 year 13.5% 8
Club Plus Super – MySuper** Balanced (60-76) 1 year 13.4% 10

Table note: All results are net of fees and tax and are for the 1 year ended 30 June 2014. 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.

Top 10 balanced options over 5-year period to 30 June 2014

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 2014 are:

Top 10 Balanced (60-76) – annual returns for 5 years as at 30 June 2014
Fund Investment Option Option Type Return Period Return (% p.a.) Rank
Telstra Super – Balanced Balanced (60-76) 5 year 10.7% 1
REST – Core Strategy Balanced (60-76) 5 year 10.6% 2
GESB Super – Balanced Growth Plan Balanced (60-76) 5 year 10.2% 3
Russell Super Solutions – Russell Balanced Portfolio Balanced (60-76) 5 year 10.1% 4
Commonwealth Bank Group Super – Mix 70 Balanced (60-76) 5 year 10.1% 4
AustralianSuper – Balanced Balanced (60-76) 5 year 10.0% 6
Plum – Pre-mixed Moderate Balanced (60-76) 5 year 10.0% 6
CareSuper – Balanced Balanced (60-76) 5 year 9.9% 8
UniSuper – Balanced Balanced (60-76) 5 year 9.9% 8
HESTA – Core Pool Balanced (60-76) 5 year 9.8% 10

Table note: All results are net of fees and tax and are for the 5 years ended 30 June 2014. Past performance is not a reliable indicator of future performance.

Source: SuperRatings 

© Copyright Trish Power 2009-2014

Copyright for this article belongs to Trish Power, and cannot be reproduced without express and specific consent.

IMPORTANT: SuperGuide does not provide financial advice. SuperGuide does not answer all questions posted in the comments section. SuperGuide may use your question or comment, or use questions from several readers, as the basis for an article topic that we publish on the SuperGuide website. We will not disclose names or personal information in these articles. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Readers need to seek independent advice about their personal circumstances.

Comments

  1. Hi Trisha,
    My Daughter has just joined the work force and is working in a costume shop. My daughter has been told that she has to organise her own superannuation account. Can you please recommend a good one with good returns, low fee’s and low risk.
    Thank you
    suzanne

    • REST seems to be a very good fund, I used to work for Telstra and both Telstra and REST seem very close in returns and both are low cost. Of course the Telstra super is only open to Telstra and Ex Telstra members and their families while REST is open to everyone.

  2. Should I be paying $2700/year for financial advice? Have small amount in super but wanting to use “transition to retirement” in the next few years. With AMP Flexible Lifetime. Should I be changing funds?

    • Hi Jan
      Definitely pays to shop around as IFA fees vary from adviser to adviser. My recommendation is for you to really question the value of IFAs. Ask yourself what the important concerns u have regarding ur Superannuation and what outcome u want to achieve for ur future that way youre advise is tailored and focused and ud get value of money advise. There are Industry Super funds IFAs that are skilled and cost competetive.

  3. Jim Okeefe says:

    HI

    Chasing some advice, I recently went ot a financial advisor and he wants me to take my super and role it to Macquarie Super Consolidator.

    I have been trying to compare, but not really having much luck. My current Super policy looks like it is in the top 10 going by another web page I was looking at.

    Any advice?

    • Hi Jim
      Im very familiar with the Super Consolidator product as I worked in the Macquarie platforms. First of all, you need to be aware that platforms can be an expensive proposition as there are multiple fees that you may face:
      1. Advser Fee- a fee that u pay your adviser based on the advise you get. Typixally this is in thr 0.5-1% of ur balance but could be more depending on the levelmof engagement u have.
      2. Platform fees- the Super Consolidator attracts a fee of 0.59% on the first $100k to manage your affairs. Buying and Selling out of managed funds is $20.50 per transaction and brokerage to buy and sell stocks is $30.75 per trade. There’s the MER fee from Fund Managers which range anywhere between 0.1-2%. So if u start adding all the expenses up, it becomes quite an expensive proposition.

      My advise to u is to understand whatthe investment proposition of ur ifA is. If his style is Equities focused, ur now able to buy atocks, ETfs and Term Deposits in a large superfund. To give u an example, Australian Super has Member Direct that gives u access to the ASx Market top 300 and 16 ETFs. Telstra Super and hostplus have a similar platform.

  4. Karmela says:

    Hi Trish!

    I have been on maternity leave and have decided not to go back to work as child care fees to dear. I am with Sunsuper and looking at other options to move as now not working no income on my part, what would be the best super to invest in which has low fees great returns/grow long term, good death cover and with a TPD that won’t be affected.

    Await you’re reply .

    Ps. Great website

    Regards

    Karmela

  5. Employed as a motor mechanic most employers in this trade go through MTAA Super, and I have stuck with them over the years. Can you provide me with a brief answer on their performance. Also when a certain super company say that they have greater benefits for certain professions, such as in this case MTAA are the preferred fund for motor trades should you stick with them for that reason.

    Thankyou

  6. Hi Trish,

    I am currently with Telstra Super and I am hoping to transfer my Telstra Super to Australian Super, as I feel the benefits and fees that I am currently receiving are crazy. would I be correct in saying that Telstra Super will not allow me to transfer funds to another preferred Super Fund. I have looked every where on the Telstra Super Website, and I can not see anywhere where it mentions transferring funds out, only In. So it looks like I will have to manage (2) Super Funds to get any real benefit if I am planning to retire in another 14 years.

    My question is: would I have to pay tax on BOTH Super funds as well as fees for the (2) Super funds?

    with thanks, Michael

    • Hey Michael
      The portability rules around Super means that uoure able to Opt out of any Super service and transfer to another fund. Best u contact Telstra Super and ask what paperwork ull need to facilitate the transfer to Australian Super. Typically, ull need a withdrawal form and a certiird copy of a valid ID. Some super funds ask for 2 cert Ids and copy of a bill. Different super funds have different policies.

      If you decide to have 2 concurrent accounts, u will pay 2 fees for both running the accohnt. Taxes are uniform in Superfund and not so much an issue here. What i mean by tjis is ur taxed at 15% for SGC and concessional contributions as well as income earned. If u have 1 fund or split ur super into 2 or 5 other funds, the taxes u pay will all be in line as u have t removed the taxing mechanism in Super. Its a flat line so long as u receive income through dividends, distributions and interest an contributions from ur employer.

      Hope this helps.

  7. Danny Joyce says:

    What has been the best performing (in terms of return) fund between Colonial First State and MLC Masterkey Business Super over the last 5 years?

  8. If I take my super at preservation age & later decide to return to work , am I able to deposit a lump sum back into my super fund ..??

  9. hey Trish, is ING SUPER any good because it seems to be going nowhere?

  10. I am currently with BT Employer Super and really dislike it. I only have the choice of that or AMP – equally as bad I think as far as fees and performance go. I believe that from next year we may be able to choose QSuper. As I am in my early 60’s and considering retirement in the next year or so would it be worthwhile changing to what seems a better fund?

    Love your newsletter by the way!
    Anne

    • Hi Anne
      I used to have a Corporate AMP superfund which I shutdown because of the bad year on year performance. Luckily, I shifted to a low fee superfund regime and put all my investments in a core fund with a 100% exposure to Australian equities at the low point if the equity market. I cashed out at the almost top of the market and Was able to obtain a net return of 40%.

      The lessons are:
      1. Its important to know what u want out of ur super taking in consideration ur own risk tolerance.
      2. Its empowering to learn the fundsmentals of investing and how markets react to the economic and external factors.
      3. Quality fund managers, low fee regime and foresight will be your good pals.
      4. If you dont understand the investment presented to you, DONT get on it until ur thoroughly informed.
      5. Dont be afraid to change and to ask.

      Good luck!

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