Australia’s best super funds revealed

Telstra Super has been named the top performing super fund in the country, returning its members more than 3% above the average fund.

As employers adjust to a new superannuation guarantee rate introduced at the start of this month, fund researcher SuperRatings has ranked the top Australian funds giving members the best investment returns. 

Telstra Super’s balanced option gave its members a 15.8% return in the 2013-14 financial year, well above the median balanced return of 12.7%.

SuperRatings founder and chairman Jeff Bresnahan told SmartCompany Telstra Super has appeared in the list of top 10 funds regularly over the last decade.

“It has been really consistent over long period of time,” says Bresnahan.

Bresnahan says the fund’s success rested on its strong property investment and its outperformance on international and local equity. He also said its in-house investment team was an advantage.

“That’s combined to give them the edge,” he says.

Bresnahan says while different funds performed better in different markets, and Telstra favoured a positive market, the fund has stood up positively even throughout the GFC.

Bresnahan also points out the standout gap between Telstra and the other funds in the top five, which were all within 20 basis points of each other.

Intrusty Super and UniSuper took out second and third places, with returns of 14.0% and 13.9% respectively, while AustralianSuper took fourth with 13.9% and Vision Super was fifth with 13.7%

Bresnahan says the two most important factors when choosing your super fund are investment returns and the amount of fees a fund charges.

He says while you can’t control how much a fund returns, you should pay attention to the fees you are changed. Balances of $100,000 should not charge more than 1% in fees, as a rule of thumb.

“It adds up to a lot of money when compounded over 20-30 years,” he says.

While he says it isn’t wise to change your super fund based on the results of just one financial year, Bresnahan says you should consider switching if your fund has continually underperformed over the last five to 10 years.

“It’s no different to a mortgage, you have every right to move funds,” he says.

Bresnahan says the major takeout from the research is super funds have continued to perform since they became compulsory in Australia in 1992. Australian funds have returned an average 7.2% per annum over that 22-year period.

He says while it may not look like a lot, it is significantly less than inflation and a solid result for retirees.

TOP 10 performing super funds (balanced)

1.        Telstra Super                                     15.8%
2.        Intrust Super                                     14.0%
3.        UniSuper                                             13.9%
4.        AustralianSuper                               13.9%
5.        Vision Super                                      13.7%
6.        VicSuper FutureSaver                    13.7%
7.        HOSTPLUS                                          13.6%
8.        Energy Super                                     13.5%.
9.        Cbus                                                      13.5%
10.        Club Plus Super                                13.4%