UPDATED: Top Performing Super Funds On Canstar's Database

As some Australians start to look at how they can rebuild their super balance when the coronavirus storm has passed, Canstar has identified the best-performing funds on its database for annual investment returns over seven years, three years and one year to 31 August 2020.

The impact that investment performance can have on retirement savings has been demonstrated clearly in recent times, with volatility in the share market brought about by the coronavirus pandemic having a knock-on impact on super balances.

At the same time, millions of Australians financially impacted by COVID-19 have applied to access their super early according to APRA under the temporary hardship rule changes, and the total amount withdrawn has exceeded $33 billion. For those hoping to rebuild their balance over the long run, being with a fund that can deliver strong returns relative to other providers could play a role.

Past performance can be one consideration when choosing a super fund because it gives an indication of what a fund has been capable of delivering in the past. But there are other factors to consider when choosing a super fund, such as the fees charged, whether the insurance offering is suitable for you, as well as the education and advice on offer.

Looking at investment performance specifically, while your super balance can grow over time as you or your employer makes contributions and your investments grow in value, the year-on-year investment returns may vary (and in some cases may even be negative).

With this in mind, Canstar has prepared a list of the top-performing super funds on its database over the last seven, three and one-year periods to 31 August 2020. Please note that these performance figures reflect net investment performance – i.e. returns minus investment tax, investment management fees, the maximum applicable ongoing management fees and membership fees. Please also note that a fund’s past performance should not be taken as an indication of its future performance.

Top performing super funds: seven-year returns (average per annum)

The following table contains a snapshot of superannuation funds in Canstar’s database based on someone aged 40-49 with a balance of $100k-250k. This table has been sorted by seven-year average annual performance (highest to lowest).

Please note that the performance information shown in the table is for the investment option used by Canstar in rating the superannuation product. Check upfront with your super provider and read the PDS to confirm whether any particular fund meets your needs before deciding to commit to it. When selecting a super fund, bear in mind that investments can go up and down, so past performance is not necessarily indicative of future performance.

To view the past performance of all super funds in Canstar’s database, use our comparison tool:

Top performing super funds: three-year returns (average per annum)

The following table contains a snapshot of superannuation funds in Canstar’s database based on someone aged 40-49 with a balance of $100-250k. This table has been sorted by three-year average annual performance (highest to lowest).

Please note the performance information shown in the table is for the investment option used by Canstar in rating the superannuation product. Check upfront with your super provider and read the PDS to confirm whether any particular fund meets your needs before deciding to commit to it. When selecting a super fund, bear in mind that investments can go up and down, so past performance is not necessarily indicative of future performance.

To view the past performance of all super funds in Canstar’s database, use our comparison tool:

Top performing super funds: one-year return

The following table contains details of the superannuation funds in Canstar’s database based on someone aged 40-49 with a balance of $100-250k. This table has been sorted by one-year performance (highest to lowest).

Please note the performance information shown in the table is for the investment option used by Canstar in rating the superannuation product. Check upfront with your super provider and read the PDS to confirm whether any particular fund meets your needs before deciding to commit to it. When selecting a super fund, bear in mind that investments can go up and down, so past performance is not necessarily indicative of future performance.

To view the past performance of all super funds in Canstar’s database, use our comparison tool:

Why is performance important for super funds?

Superannuation is all about setting you up for the future, providing you with a large enough nest egg so that you can retire in comfort. It’s important then, that while you’re still working, your super is working for you. The investment return that your super makes, its performance, is a key factor in this.

A small difference in average super performance, as little as 1%, can really add up over the years. Here is a hypothetical example:

The Difference 1% in Investment Returns Can Make on Superannuation Balance
Scenario 1 Scenario 2 Scenario 3
Starting age 30 30 30
Retirement age 67 67 67
Average starting gross annual income $89,123 $89,123 $89,123
Average Starting Balance $23,749 $23,749 $23,749
Hypothetical investment returns 6% 7% 8%
Annual fees (% of balance) 1.34% 1.34% 1.34%
Starting insurance premium $266 $266 $266
Account Balance at retirement $529,761 $658,502 $825,710
Difference to Scenario 1 retirement balance $128,741 $295,950
Source: Source: www.canstar.com.au – 5/11/2020. Based on a 30 year old with a starting balance of $23,749 per APRA Annual Superannuation Bulletin, starting gross annual income of $89,123, growing 2.5% annually, per ABS Average Weekly Earnings and RBA Target Inflation, retiring at age 67. Employer contributions are assumed to be taxed at 15%. SG contribution amounts per Government announced rates assumed to be paid into the superannuation account quarterly. Net performance deducts average fees of 1.34% p.a. based on products in Canstar’s database for a 30 year old, with a balance of $20,000. Average life and TPD insurance premium of $265.71 (increasing with inflation each year) is assumed charged at the end of each year based on products in Canstar’s database for an average balance of $80k and age of 35 years old. End balances are shown in “today’s dollars”, i.e. they have been adjusted for inflation. Note all information on income, annual superannuation fees and performance returns are used for illustration purposes only. Actual returns and the value of your investment may fall as well as rise from year to year; this example does not take such variation into account. Past performance is not a reliable indicator of future performance.

As you can see from the table above, a small 1% difference in the performance of investments within super per annum can create a massive difference in the amount you have when you retire.

That’s why when looking at a super fund’s past investment success, simply looking at a 12-month difference may not be enough. It can be a better idea to look at that fund’s performance over many years, which is something you’ll be able to find on your super statement. 

And remember – demonstrating consistent returns every year can be more important than having one or two amazing years of investment performance. If your investment returns within super are lower than average over a period of five years or more, then you might want to consider other options.

Canstar can help you compare available super funds, so you can see which ones might suit you.

Superannuation FAQs

Exactly which super funds will offer you the lowest fees may well depend on what your account balance is. This is because super fees can be charged as a percentage of your balance but also as flat fees (set dollar amounts) that in some instances may be set at different levels depending on your balance. Generally, the higher the balance, the more you’ll have to pay in fees. Also bear in mind that some fees can vary depending on your fund’s investment performance.

You can view a roundup of some of the lowest-fee funds for a variety of balances currently on offer on Canstar’s database.

When choosing a super fund, you may want to compare providers based on factors such as their past performance, the fees you’ll be charged, the investment and insurance options available, and other services that may be important to you, such as easy rollover of funds and access to educational resources. You can compare a range of super funds using Canstar’s super comparison table.

You can change super funds by filling out a ‘rollover form’ through your MyGov account or through your desired super fund (if they have one). To do so, you’ll need to provide proof of identity. Before changing funds, consider carefully the implications of moving and what it might mean for you in the future. For example, consider any insurance cover you might lose by closing your account with your existing fund.
Super funds cannot charge you a fee for moving all or part of your money to a different fund. Legislation banning exit fees came into effect on 1 July 2019, as part of the Government’s Protecting Your Super package.
When it comes to retirement, there’s no ‘one-size-fits-all’ approach. However, to give you a rough guide, the Association of Superannuation Funds of Australia (ASFA)’s 2018 Retirement Standard report suggests that singles would need $545,000 in super and couples would need a combined $640,000 to fund a comfortable retirement.
What exactly is a ‘comfortable’ retirement? According to ASFA, it would enable a healthy retiree to be involved in a broad range of leisure and recreational activities and purchase things like a reasonable car, good clothes, electronics, as well as domestic and occasional overseas travel.

This article was reviewed by our Sub-editor Tom Letts and Finance Editor Sean Callery before it was published, as part of our fact-checking process.

Originally written by William Jolly

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