What matters most to your super: performance or low fees?
A recent research report shows that most super fund members think that fees are a more important consideration than performance when comparing funds. Interestingly, this changes as members get older with members over 55 ranking performance as a more important factor.
Wes Hatch, AustralianSuper Senior Product Design Manager, explains: “While fees are an important part of the performance equation they’re not the be all and end all.
“While some funds might have lower fees, they might not perform very well. Likewise, going with a fund that charges high fees doesn’t mean you’ll get the best performance.”
There are lots of funds out there advertising low fees, but how do you know what you’re really getting for your money?
One way to measure the real value you’re getting from your fund, is to look at the 'net benefit.'*
The net benefit is basically your investment earnings, after any fees and taxes have been taken out. It’s calculated based on historical returns.
As the net benefit has all the fees and taxes taken out, it gives you an indication of the real value your super fund is adding to your retirement savings. After all, the higher the net benefit, the more super for you.
This graph shows how much better off a member in AustralianSuper’s Balanced option would be after 10 years compared to a member in the average fund, with various assumptions on the member’s starting super balance and annual income.* As you can see the AustralianSuper member has an ending balance of $154,853 compared to the member in the average fund who has $140,415. The difference between the two balances of $14,438 comprises AustralianSuper’s higher earnings of $9,459 and lower fees of $4,979.