Super funds that invest responsibly outperform their peers, study suggests

A study shows funds that invest responsibly outperform their peers over one-, three- and five-year time frames.

Responsible investing – also often referred to as ethical investing – appears to be becoming more and more common, especially among super funds.

A new report from the Responsible Investment Association Australasia (RIAA) found that 81% of Australia’s largest super funds are committed to responsible investment (up from 70% in 2016). It also revealed that more than half (32 out of the 57 super funds considered) offer a total of 88 responsible investment options (compared to 24 funds offering 54 options in 2016).

And the good news is you may not necessarily have to sacrifice returns by opting for a super fund that takes a responsible approach. In its Responsible Investment Super Study 2019, which presents the results of an annual survey of Australia’s 57 largest superannuation funds, RIAA compared the MySuper performance of super funds employing responsible investment strategies with the MySuper options of those super funds that are not. It found that Australian super funds that comprehensively engage in responsible investment are outperforming their peers over one-, three- and five-year time frames.

Over five years, for example, the 34 Responsible Investment (RI) super funds that were considered returned 8.14% .a. on average over five years, while the 20 non-RI super funds returned 7.70% p.a. on average over that same period.

Responsible Investment (RI) super funds v non-RI super funds returns

← Mobile/tablet users, scroll sideways to view full table →

	1-year average	3-year average (% p.a.)	5-year average (% p.a.)
Non-RI (20 funds)	7.31%	8.65%	7.70%
RI (34 funds)	7.33%	9.06%	8.14%
Benchmark average (54 funds)	7.32%	8.90%	7.98%

Source: RIAA Responsible Investment Super Study 2019. Financial performance of MySuper for financial years to 30 June 2019.

Responsible super leaders

The report also assessed Responsible Investment (RI) super funds based on five criteria and came up with a list of 13 Australian super funds (and one New Zealand super fund) which it identified “as leaders for articulating and demonstrating a comprehensive approach to responsible investment”.

The funds that made RIAA’s Super Study leader board are:

Australian Ethical
AustralianSuper
CareSuper
Cbus
Christian Super
First State Super
Future Fund
Future Super
HESTA
Local Government Super
NZ Super
Unisuper
VicSuper
Vision Super

RIAA then compared the performance of the funds that made the Super Study leader board to those that didn’t. It found the “leaders” outperformed the “non-leaders” by about 100 basis points over each of the three time periods.

“This reinforces how important the consideration of environmental, social and corporate governance factors is to delivering the best possible outcomes for super fund members,” said CEO of RIAA, Simon O’Connor.

RI Super Study 2019 leader board v non-leaders

← Mobile/tablet users, scroll sideways to view full table →

	1-year average	3-year average (% p.a.)	5-year average (% p.a.)
Non leader (41 funds)	7.07%	8.62%	7.74%
RI Super Study leader board (13 funds)*	8.11%	9.81%	8.71%
Benchmark average (54 funds)	7.32%	8.90%	7.98%

Source: RIAA Responsible Investment Super Study 2019. Financial performance of MySuper for financial years to 30 June 2019. *Future Super data not available for time period.

“Our consumer research shows that more than 9 in 10 (92%) Australians expect their super or other investments to be invested responsibly and ethically, and 4 in 5 (78%) Australians would consider moving super or other investments to another provider if their current fund engaged in activities not consistent with their values,” said Mr O’Connor.

“If the superannuation industry is to realise its potential for delivering long-term retirement outcomes, super funds need to be demonstrating how they are fuelling a productive, prosperous and healthy future for their members. This report shows us that this responsible investment is not just something Australians want, but is a critical part of delivering stronger member outcomes.”

Aware Super | High Growth (Lifecycle investment)

More details

PROMOTED

Canstar 2022, 2023 & 2024 Outstanding Value Super Award
Award Winning App Helps You Stay In Control
Super Returns, Super Advice, Super Helpful

AustralianSuper | Balanced (Accumulation)

More details

PROMOTED

Australia’s largest fund, join easily online
Canstar Outstanding Value for superannuation
Read PDS & TMD at australiansuper.com

HESTA | Balanced Growth

More details

PROMOTED

Strong long-term performance
$70 Billion In Total Assets
With more than 1,000,000 members

UniSuper | Personal Account - Balanced (MySuper)

More details

PROMOTED

Look forward to greater super
Low fees
Australia’s largest sustainable investor

Australian Ethical | Balanced (accumulation)

More details

PROMOTED

Australian Ethical Balanced (accumulation) Option
Invest With Heart. Choose Australian Ethical Super
Read the PDS & TMD on our website. AFSL 526 055

Canstar may earn a fee for referrals from its website tables and from Promotion or Sponsorship of certain products. Fees payable by product providers for referrals and Sponsorship or Promotion may vary between providers, website position, and revenue model. Sponsorship or Promotion fees may be higher than referral fees.

On our ratings results, comparison tables and some other advertising, we may provide links to third party websites. The primary purpose of these links is to help consumers continue their journey from the ‘research phase’ to the ‘purchasing’ phase. If customers purchase a product after clicking a certain link, Canstar may be paid a commission or fee by the referral partner. Where products are displayed in a comparison table, the display order is not influenced by commercial arrangements and the display sort order is disclosed at the top of the table.

Sponsored or Promoted products are clearly disclosed as such on the website page. They may appear in a number of areas of the website, such as in comparison tables, on hub pages, and in articles. The table position of the Sponsored or Promoted product does not indicate any ranking or rating by Canstar.

Thanks for visiting Canstar, Australia’s biggest financial comparison site*

This article was reviewed by our Editorial Campaigns Manager Maria Bekiaris before it was updated, as part of our fact-checking process.

Effie Zahos

Canstar Ambassador & Money Expert InvestSMART

Canstar Ambassador & Money Expert InvestSMART Effie Zahos has dedicated her career to help consumers gain a better understanding of their finances. She is currently Canstar Ambassador and Chief Content Officer and Money Commentator at InvestSMART. As one of Australia’s leading personal finance commentators, Effie regularly speaks with media across Australia. Not only is Effie the money expert for the Today Show, her financial commentary features in many of Australia’s other best-known media outlets, including the ABC, news.com.au, the Sydney Morning Herald and the Daily Telegraph. Effie was previously the editor of Money magazine, having helped establish it in 1999. Effie is the author of The Great $20 Adventure, A Real Girl’s Guide to Money and Ditch the Debt and Get Rich. She sits on the board of directors for Ecstra, a not-for-profit organisation committed to building the financial capability of all Australians. You can follow Effie on Twitter, LinkedIn, Instagram or Facebook.

In this article