Research house Canstar has analysed Australia’s $2.7 trillion superannuation industry and come up with six funds it deems the best operating in the market place overall.
Here is what they had to say about the top performers, which may include your fund. The list is in alphabetical order rather than by merit and, interestingly, size was not a performance factor with a wide variety of funds in the top six.
However, all the top six were not-for-profit or industry funds. Performance was measured on financial returns, insurance costs and offerings as well as customer service and financial advice.
“We considered how each fund performs across various ages and balances to understand how they are able to support Australians in their journey towards retirement,” Canstar executive Steve Mickenbecker said.
“The six top funds performed strongest in our review across a broad range of consumer groups when it came to their combination of investment returns, fees, insurance options and access to advice and information.”
Canstar found AustralianSuper, the country’s biggest fund with $140 billion under management, has reported consistently strong returns over the past five years. From 2014 to 2018, AustralianSuper’s returns were 1.75 percentage points higher than the market average, which is calculated using 67 major default products from Canstar’s database.
The fund’s default insurance offer was extensive including death, income protection and TPD [total and permanent disability] cover. However, the breadth of its cover seemed to have made it more expensive than the market average, Canstar found.
AustralianSuper also performed strongly across all featured categories, particularly when it came to financial advice and education. It offers an extensive suite of calculators and educational resources to help members make good choices.
Catholic Super, a $9.5 billion fund, moved into Canstar’s five-star category over 2018 after the introduction of a new default product. It uses age-based asset allocation, putting younger members into more aggressive investment options for higher growth. As members age, their allocations become more conservative.
This strategy paid off, with those in the 20s, 30s and 40s-age groups recording 2018 returns 1.56 percentage points above the market average. The 50s and 60s returns were 0.11 percentage points below the market average, as allocations became more conservative with age. Over five years, the fund performed best of the top six with returns 2.55 percentage points above the market average.
HostPlus, with $33 billion under management, performed well with five- year returns 1.87 percentage points above the market average.
Its default insurance cover included default death and TPD cover, but not income protection. Its insurance costs were slightly higher than the average.
Like HostPlus, this fund covers hospitality workers, but is small with $2.5 billion under management. It was a strong performer over five years, averaging 2.04 percentage points higher than the industry average.
In 2014, its performance was stellar, returning 5.06 percentage points above the average.
A South Australian-based industry fund, Statewide has $8.3 billion under management. For the past five years, its performance returns have been an average of 1.86 percentage points above the market average.
Its insurance offer was more costly than the average but included death, income protection and TPD cover as default products.
This Queensland-based giant with $59 billion under management, performed at 1.12 percentage points above the average over five years. Its insurance costs were just above the average but it did not offer default income protection.
However, the fund does offer very high insured amounts on its default death and TPD cover. It scored very highly in terms of financial advice and member education.
The New Daily is owned by Industry Super Holdings