What super fund members should know when comparing returns

Share this article:

Why you need to compare apples with apples on super fund performances and fees.

.

If you’re one of the roughly 16 million Australians with a managed superannuation fund account, you may be feeling reasonably chuffed at the moment.

After all, your account balance is probably higher now than it was just over a year ago, at the start of the 2023-24 financial year.

The buoyant returns on global financial markets over the last financial year, particularly on share markets, would have provided a performance tailwind for the many super fund members with an exposure to shares.

For example, the Australian share market, measured by the All Ordinaries Accumulation Index, gained 12.5% over 2023-24. The United States share market, measured by the S&P 500 Index, returned almost double that, gaining 24.1% over the 12 months.

Then add to investment returns the extra employer contributions you should have received as a result of the 0.5% increase in the compulsory Superannuation Guarantee levy to 11% from 1 July 2023. Those higher contributions, together with any additional contributions you may have made during the financial year, and combined with investment market returns, should have accelerated your balance by 30 June.

Retail and industry super funds have now started reporting their performance returns from 2023-24 from the various investment options they have available to their members.

What’s most important for super fund members is to make sure, if you’re comparing different super fund returns, that any quoted performance numbers shown are after all fees and costs, including administration fees, investment fees and costs, and transaction costs. Other fees and costs may also apply.

 

Comparing apples with apples

Your personal super return from 2023-24 will largely depend on the investment options you’ve chosen for your super, and how your super fund invested your money.

It’s important to be aware that not all super funds invest in the same way. For example, underlying Vanguard Super’s range of investment options are core assets classes such as Australian and international equities, Australian and international fixed interest, and cash.

By contrast, some super funds are known to invest heavily into unlisted direct property assets in Australia and overseas, infrastructure projects, private equity, and other alternative assets.

These types of assets can be wrapped into super products using conventional investment industry labels such as balanced, growth, and high growth.

This makes it difficult, if not impossible, for super fund members to accurately compare their super investments with those offered by other super funds.

Another key area where super investors should focus when analysing their latest performance returns is the fees being charged by their fund provider.

Comparing apples with apples on fees is equally as hard as comparing apples with apples on super fund investment returns.

There is a wide variation in the fees being charged by different super funds, with the Federal Government’s YourSuper comparison tool showing some super funds are charging their members more than double the amount of annual fees than other providers.

“Investment performance absolutely matters, but so do fees and costs, and neither should be viewed in isolation,” says Vanguard’s Chief Investment Officer, Duncan Burns.

“Coupled together, investment performance, and fees and costs are the factors that will materially impact your superannuation balance at retirement.”

 

Most Australians don’t know

Vanguard’s retirement research has found that many Australian are not engaged with their super.

As such, important considerations such as where and how their super is being invested, and the ongoing fees they are being charged, are under their radar.

“We know from our most recent How Australia Retires survey that almost 1 in 2 Australians don’t know what they pay in superannuation fees – and that’s concerning,” Mr Burns says.

“We’re doing our bit at Vanguard Super to ensure our members not only benefit from our low fees, but also have clear information about their fees.”

With Vanguard Super heading towards $1.5 billion under management in less than two years, Australians’ retirement needs are front and centre of the fund’s super offer.

“Nearly 50 years ago, the Vanguard Group pioneered index investing as a low-cost and effective strategy to help get people closer to their financial goals,” Mr Burns says.

“All of Vanguard Super’s investment options are indexed solutions which offer our members distinct advantages – diversification of assets to help reduce risk and weather market volatility; a focus on long-term performance to tap into the long-term returns generated by investment markets; and, critically, lower fees and costs to help keep more of our members’ money in their super to grow their savings and maximise their returns.

“By using indexed solutions for all Vanguard Super products, we’ve been able to keep our costs low while still delivering value and strong performance for our members so they can retire with confidence.”

 

Important information and general advice warning

Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee of Vanguard Super (ABN 27923449966) and the issuer of Vanguard Super products. The Trustee has contracted Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) to provide some services to members of Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc. (collectively, "Vanguard"). The retirement savings tips provided above are general in nature and don’t take into account your personal financial objectives, situation or needs. You should consider your objectives, financial situation or needs, and the Product Disclosure Statement (PDS) and Target Market Determination (TMD) before making any decision about Vanguard Super. The PDS and TMD can also be accessed free of charge by calling 1300 655 101. Before you make any financial decision regarding Vanguard Super, you may wish to seek professional advice from a suitably qualified adviser. Any past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. The information above is current as at time of publication and was prepared in good faith and we accept no liability for any errors or omissions.

 

©2024 Vanguard Investments Australia Ltd. All rights reserved.

 

 

July 2024
Vanguard
vanguard.com.au

 

 

 

Want to know more?

Do you have a question about something you've read in this article? Need more information? Want to book an appointment? Simply let us know below and we'll get back to you ASAP.

Share this article:

Get in touch

logo

General Advice Disclaimer | Privacy Policy

Contact Us

General Disclaimer

The information contained on this website is general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.

Dr John Tickell is a registered Medical Doctor, who graduated at the University of Melbourne, Australia. Dr John has spent several decades travelling and researching the eating and living habits of the longest living, healthiest people on our planet.

The author may give opinions and make general or particular statements in this literature regarding potential changes of lifestyle habits based on experience and research. You are strongly advised not to make any changes or take any action as a result of reading or listening to this material without specific advice from your doctor, physician or registered Health Professional.

The author, the Publisher, the Editor and their respective employees or agents do not accept any responsibility for the actions of any person, or injury, loss or damage occasioned - actions which are in any way related to information contained herein.

Opinions and statements in this literature are based on verified research and experiences by the authors and are to be regarded as health and wellness advice.

Privacy Policy

What Personal Information Do We Collect?

The personal information that we collect will depend on your relationship with us and the service(s) you or your organisation have engaged us to provide or are interested in. It may include:

Name and contact information (including telephone and mobile number, email address and residential and postal address);

Individual information (including racial or ethnic origin(s), language(s) spoken, religious belief(s) and affiliation(s), date of birth, age, place of birth, gender(s), occupation(s), employment and qualification details, financial records, income details, asset listings, taxation records, bank account details, insurance policies, medical history, disability status, criminal record and Court records);

Payment and transactional information (including banking and credit card details);

Other personal or sensitive information (including information contained in communications or documents, any information required due to the nature of your matter, or information we are required to or permitted to collect by law).

Collecting Personal Information

HOW WE COLLECT PERSONAL INFORMATION

We may collect your personal information directly from you or in the course of our dealings with you. For example, we collect personal information from you or about you from:

Correspondence between you and us;

Meetings and interviews with us, telephone calls with us, the instructions you provide to us;

Visits to and submissions you make on our website;

Your interactions with our electronic direct mail and/or emails from our marketing campaigns (such as clicks on links included in these emails); and

Registration and forms you may fill in for our marketing-related activities and events.

WHY WE COLLECT, HOLD AND USE PERSONAL INFORMATION

We collect and hold your personal information for a variety of purposes, and you permit us to use it:

To provide you with our services and carry out our business functions;

For purposes related to the provision of our services such as , educational briefings, seminars and coaching and other service offering updates, conducting client satisfaction surveys and feedback requests, statistical collation and website traffic analysis;

Where you have consented to its use or disclosure;

Where we reasonably believe that use or disclosure is necessary to lessen or prevent a serious, immediate threat to someone's health or safety or the public's health or safety;

Where we reasonably suspect that unlawful activity has been, is being or may be engaged in and the use or disclosure is a necessary part of our investigation or in reporting the matter to the relevant authorities;

Where such use or disclosure is required under or authorised by law (for example, to comply with a subpoena, a warrant or other order of a court or legal process);

Where we reasonably believe that use or disclosure is necessary for the prevention, investigation, prosecution and punishment of crimes or wrongdoings or the preparation for, or conduct of, proceedings before any court or tribunal (or the implementation of orders of a court or tribunal or on behalf of an enforcement body);

To develop and improve our business, products and services; and

For any lawful purpose.

Where we wish to use or disclose your personal information for other purposes, we will obtain your consent.

HOW WE HOLD AND STORE PERSONAL INFORMATION

Your personal information is held and stored on paper, by electronic means or both. We have physical, electronic and procedural safeguards in place for personal information and take reasonable steps to ensure that your personal information is protected from misuse, interference, loss and unauthorised access, modification and disclosure:

Data held and stored on paper is stored in a secure premises.

Data held and stored electronically is protected by internal and external firewalls, high encryption and all access to electronic data including databases requires password access

Access to personal information is restricted to staff and contractors whose job description requires access. Our employees and contractors are contractually obliged to maintain the confidentiality of any personal information held by us.

We undertake regular data backups, with the data copied and backed up to multiple locations for redundancy purposes.

Our staff receive regular training on privacy procedures.