Note: Every few months or so, we update this article with the latest performance data on superannuation funds (and pension funds) issued by SuperRatings, SelectingSuper, ChantWest and the Australian Prudential Regulation Authority (APRA). This article contains the latest data for investment performance up to 30 June 2012, and includes data on the poorest performing super funds. For performance data relating to later months, refer to other SuperGuide articles.
A popular question from SuperGuide readers is: what is the best-performing super fund in Australia?
Using the term ‘best’ is dangerous in any field because it involves some level of personal judgement, and the answer can change frequently depending on what you’re measuring, and when you’re making the assessment, especially when we’re considering the current volatile markets. Usually, there are a bunch of top-performing super funds over time rather than one particular super fund.
The answer to this popular question also depends on what timeframe you’re looking at, what type of returns you’re comparing (after fees and taxes, or gross), and what type of investment option (or asset allocation) you have chosen for your super money.
A more relevant question is: what super fund is the most appropriate super fund (or investment option) for my retirement needs? The original question then needs to be divided into two parts:
- how does the super world measure the best-performing (and the worst-performing) super funds?
- how do you measure fund performance in relation to your own circumstances?
The first part of the question I answer in the article below, and I cover the investment returns for the worst-performing super funds at the end of this article. The second part of the question I answer in another SuperGuide article Super for beginners, part 11: Is my super fund good enough?
The award for the best super fund, according to…
The following sections within this article list selected performance rankings from 4 organisations:
- Chant West
- Australian Prudential Regulation Authority (APRA)
Every month, quarter or 12 months, you’re likely to read about the best-performing super funds, the best value super funds or the best super fund over the long term (‘long term’ meaning anything from 3, 5, 7 or 10 years) in the daily newspapers, and also on SuperGuide.
Around 80% of all Australians with superannuation accounts have their money invested in the default investment option of super funds. The default investment option is usually a ‘balanced’ or a ‘growth’ investment option (typically 60 to 80% invested in growth assets such as shares and property). The performance lists that you see in the newspapers usually rank the ‘balanced’ or ‘growth’ investment options of super funds because that is where most Australians have their super money. Most of the lists in this article rank the ‘balanced’ or ‘growth’ options.
Note: According to SuperRatings, the median annual return for the default investment option for the five previous financial years were:
- 2011/2012 financial year: 0.4% (gain)
- 2010/2011 financial year: 8.7% (gain)
- 2009/2010 financial year: 9.8% (gain)
- 2008/2009 financial year: negative 12.7% (investment loss)
- 2007/2008 financial year: negative 6.4% (investment loss)
1. SuperRatings performance tables
When assessing the investment returns of super funds, the process is more effective if you have a benchmark available to compare how well the top super funds have performed against the average, and to compare the average and the top-performing funds, against your own super fund’s returns.
SuperRatings regularly provides median returns for the different asset allocations – High Growth, Growth, Balanced, Conservative Balanced, Capital Stable, Secure, Australian Shares, International Shares. The returns are based on the median returns of the largest 50 (SR50 Index) or largest 25 (SR25 Index) super funds under review by SuperRatings. A median is simply choosing the return for the fund in the middle of the list. According to SuperRatings, the SR50 Index and the SR25 Index are a “good guide to the actual return of the ‘average’ fund over the same time frames”.
|SuperRatings – median returns for balanced investment option|
|Latest Returns to 30 June 2012|
|Index Name||1 Year (% p.a)||3 Year (% p.a)||5 Year (% p.a)||7 Year (% p.a)||10 Year (% p.a)||20 year (% p.a.)|
|SR50 Balanced (60-76) Index||0.4||6.3||-0.2||4.0||5.4||6.6|
Past performance is not a reliable indicator of future performance. Negative returns appear as follows: -0.2% means a loss of 0.2%
Source: SuperRatings. Visit the website for more information on the different indices.
SuperRatings –Top 10 ‘balanced’ super funds over 5 years
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||Return Period||Return (% p.a)||Rank|
|ESSSuper Accum – Balanced||5 year||2.71%||1|
|LGSuper Accum – Conservative Balanced||5 year||2.59%||2|
|Commonwealth Bank Group Super Accumulate Plus – Mix 70||5 year||2.45%||3|
|FSS – Health Super Option – Medium-Term Growth||5 year||1.99%||4|
|QSuper – Qsuper Balanced||5 year||1.8%||5|
|REST – Core Strategy||5 year||1.74%||6|
|Acumen – Core Strategy||5 year||1.74%||7|
|GESB Super –Balanced Conservative Plan||5 year||1.55%||8|
|CareSuper – Balanced||5 year||1.15%||9|
|AMG Universal Emp – Balanced||5 year||1.14%||10|
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 provide some performance data (free of charge) on super funds and pension funds. The latest reports cover performance over 1, 3, 5 and 7 years as at 30 June 2012, and SuperRatings updates these performance tables monthly. You can access the SuperRatings Super Performance List and the Pension Performance List by visiting the SuperRatings website.
2. SelectingSuper performance tables
SelectingSuper also produces benchmark indices that you can use to compare how well the top super funds have performed against the average, and to compare the average and the top-performing funds, against your own super fund’s returns.
SelectingSuper reports returns for the different asset allocations – 5 investment options and 8 asset classes, and also reports returns for SelectingSuper’s top 50 default investment options (usually balanced or growth).
SelectingSuper provides the top 50 super funds for other investment options as well. SelectingSuper provides benchmark returns for both superannuation funds and retirement funds (click here to access the latest returns reported by SelectingSuper) .
3. Chant West performance tables
Rating company, Chant West, produces slightly different benchmark indices compared with SelectingSuper and SuperRatings. Chant West provides benchmark median returns for five investment options -All Growth, High Growth, Growth, Balanced, Conservative.
|Chant West – Median performance by fund category to 30 June 2012 (%)|
|Fund category||3 Month||1 Yr||3 Yrs (pa)||5 Yrs (pa)||7 Yrs (pa)||10 Yrs (pa)|
|All Growth (100% growth assets)||-3.8||-2.5||6.3||-3.3||2.5||4.4|
|High Growth (81–100% growth assets)||-2.7||-1.0||6.7||-1.9||3.4||4.9|
|Growth (61–80% growth assets)||-1.6||0.5||7.0||-0.1||4.0||5.4|
|Balanced (41–60% growth assets)||-0.4||2.8||7.2||1.6||4.3||5.5|
|Conservative (21 –40% growth assets)||0.3||4.3||6.8||3.3||4.9||5.6|
Note: Table compares the median performance for each category in Chant West’s multi-manager performance survey, ranging from All Growth to Conservative. Performance is shown net of investment fees and tax. It does not include administration fees or adviser commissions. Negative returns appear as follows: -1.6% means a loss of 1.6%
Source: Chant West (www.chantwest.com.au)
4. APRA takes whole-of-fund approach
The performance tables issued by the Australian Prudential Regulation Authority (APRA) have had mixed reviews, with particular criticism coming from the retail fund sector. I believe the APRA tables are still an excellent resource for consumers (for background on the APRA tables and how you can best use the tables, refer to article Ten handy uses for the APRA 200 Performance list).
The latest APRA tables (released in March 2012) summarise the performance of Australia’s 200 largest super funds for the 12 months ending 30 June 2011, for the 3-year period ending 30 June 2011, and for the 5-year and 7-year periods ending 30 June 2011, and for each of the previous seven years. The APRA tables also include super funds paying pensions.
The next edition of the Superannuation Fund-level Rates of Return publication will be released in 2013.
The award for the worst super fund…
It is very difficult to access performance data on the worst-performing superannuation funds in Australia, which makes it challenging for Australians seeking to benchmark the performance of their current super fund.
I have made many requests for this information but I have received silence or a polite ‘no’ in response. Although I cannot provide the names of super funds with the worst returns, I can give you the investment returns delivered by the worst-performing super funds, which you can then compare against your super fund’s returns. I can also provide the investment returns delivered by the best-performing super funds, and you can decide if your super fund is keeping up with the top-performers.
The table below lists the median return for the different various investments, and also the highest return delivered for that investment option by an Australian super fund, and the lowest return delivered by an Australian super fund.
|SuperRatings: Best and worst fund option performance for year ending 30 June 2012|
|Balanced (60-76% growth)||6.2%||0.5%||-3.9%|
|Growth (77-90% growth)||4.9%||-1.0%||-6.8%|
|Capital Stable (20-40% growth)||7.3%||4.1%||0.6%|
Source: SuperRatings media release, 26 July 2012