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Industry SuperFunds vs Retail funds

Independent Australian data has shown that over the past decade, Industry SuperFunds have outperformed the average retail fund. This means that, where superior performance continues, members of an industry fund are likely to have more money in their super than those people whose super is with a retail fund. This table shows differences on a salary of $50,000 per year, with a starting balance of $50,000. If your salary or balance is higher the difference will be higher too.

  Industry fund Retail fund Difference
5-year outcomes $91,316 $86,816 $4,500
10-year outcomes $168,677 $156,270 $12,407
15-year outcomes $244,646 $213,761 $30,885

Assumptions

How do I know which fund will perform best in future?

While it is impossible to accurately predict which fund will top the performance ranking, data collected over many years suggests that industry funds often have higher returns. When looking at past data however, it’s important not to be influenced by short-term performance, as it’s long-term performance that gives a better picture – though it is always still an estimate.

Every fund has different approaches to investing super, and these can change, as can the various markets they invest in. This means that best and worst performing funds in 2021, might not be the same as those in 2022. However, an independent comparison of funds can provide a good snapshot of superannuation funds and can help you decide which one is right for you, depending on your circumstances and what you’re looking for in a fund.

FAQs

Why does performance vary from year to year?

Like any investment, a wide range of local and international factors will have an effect on super performance. Share markets – where a huge proportion of super is invested – go up and go down in value, as do other investment types such as cash, property, infrastructure and bonds. These are all areas where a fund’s finance experts will invest your super to try and get the best returns, based on their knowledge. Unfortunately, no one can predict with certainty how the different investments will perform in the year ahead.

Should I worry when performance dips?

The occasional dip in performance is quite normal, and often factored-in to an investment approach. If you are a long way from retirement, you may be comfortable with more frequent dips, if that also means greater opportunity for bigger gains. The closer you are to retirement, the more conservative you may want to be in your investment. If your fund is regularly showing poor performance however, you may want to consider changing to one that shows a history of better, long-term returns.

Does super double every 10 years?

Maybe. The Rule of 72, says that if you divide 72 by the rate of return (e.g. interest rate or annual rate of super growth) you’ll arrive at the number of years it should take to double in value. This means that, for super to double in ten years, it should offer an average return of 7.2%. This is a neat piece of maths but it is definitely not guaranteed as no super fund guarantees performance.

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