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Judging a super Fund’s Performance
A super fund’s investment performance will change from year to year. Your super will grow over the long term, but in the meantime you might experience some years of low and even negative returns.
Being able to judge the performance of your super fund will help you make good decisions about your retirement savings.
Looking at fund performance
Your super fund’s investment performance will make a big difference to how much you will retire on.
No-one can reliably predict which fund will perform the best. It’s far better to pick the right investment strategy and the fund with lower fees, and take the ups and downs of investment performance in your stride.
When judging the performance of super funds:
- Look for a reasonable performance. It’s a waste of time trying to pick next year’s top performer based on last year’s figures.
- Look at the fund’s performance over at least 5 years. Super is a lifetime investment, and short-term figures, such as the last 12 months or less, are not very useful.
- Look at the fund’s performance after the impact of fees and tax.
- Compare like with like. Look at what the fund is investing in. If a fund has 80% of its money in shares and property, only compare it with other similar funds, not funds with most of their money in cash and fixed interest.
- Try to use the same start and finish dates for each fund. Five-year performance from June to June will differ from January to January.
Long term performance is what matters
How well did your fund invest your money? The fund’s annual report tells you the investments it made and how they performed during the year. You can also get useful information from most funds’ websites.
Smart tip
If your fund performed worse than average over a 5-year period, consider changing.
Does the return broadly match the target set out in your fund’s product disclosure statement? If not, look for an explanation and ask yourself if it makes sense.
Few super funds consistently outperform the long-term averages, and it’s really guesswork trying to pick the few that will.
Past performance is no guarantee of future returns. Today’s top-performing funds tend to fall back to the average over time. However, consistently poor performance can prove hard to turn around.
Compare super funds
Super comparison websites like these, publish ratings on super funds:
Looking at the performance of your super fund will help you stay in control of your super money. Check how your fund’s 5-year return compares to the average for that investment option (e.g. growth, balanced, etc). Super is a lifetime investment so 1 year’s returns are not a reason to change funds.
Please contact us on |PHONE| if you would like to discuss.
Sources:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at www.moneysmart.com.au
Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.
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