If you’re looking for the best type of super fund, it really helps to know these 5 super fund types, how they are different and what that means for you.
Here are five main types of funds: public sector funds, corporate funds, retail funds, industry super funds and self managed super funds. Each tile highlights key points of each fund type. The comparison charts below provides further valuable insight.
1 – Public Sector Funds
Public Sector funds are run specifically for government workers – quite often, if you do have a public sector fund, you won’t have a choice to move to any other type of fund until you leave government.
Key points
- Stock Market Based: Investments may vary, but are typically utilising managed funds containing stocks and bonds
- Members: 3.2 Million Australians – 13.1%
- Assets Managed: 18.1% of the total wealth in super. Each member has
If you’re in a Public Sector fund, you should be doing quite well.
It’s not typical to be able to roll your super into another fund while you are using a Public Sector Fund. Speak to your HR team to learn more about how your retirement is shaping up.
- Wealth management rank: 3rd
2 – Corporate Funds
Corporate funds are set up by large Australian companies (e.g Telstra) and are used for their employees. They generally appoint a board of trustees to manage the investment of their workforce’s super.
Key points
- Stock Market Based: Investments may vary, but are typically utilising managed funds containing stocks and bonds
- Members: 200,000 Australians – 0.8%
- Assets Managed: 1.2% of the total wealth in super
If you’re in a Corporate fund, you’ll need to speak to your HR team to learn more about your super options.
In general, you should be outperforming people with retail and industry funds, but it’s always important to check and compare from time to time to ensure you are planning your best retirement.
- Wealth management rank:2nd
3 – Retail Funds
Retail funds are typically run by investment companies and banks. The fees you pay to them need to include a profit for their shareholders. Fees can be a little higher than industry funds.
Retail funds primarily invest in the stock market through managed funds using Australian and international shares and bonds.
Key points
- Stock Market Based: Investments typically utilise managed funds containing stocks and bonds on the share market
- Members: 6.2 Million Australians – 24.4%
- Assets Managed: 19.4% of the total wealth in super.
- 2005 – 2021 average growth: 5.64%
Retail funds have generally not performed as well as Industry funds over the years (See the chart below). If you’re in a retail fund, it’s important to check the performance of your fund by comparing other options to avoid a poor retirement super balance (and lifestyle).
- Wealth management rank:4th
4 – Industry Funds
Industry funds Industry funds are run on behalf of members, to profit their members (not shareholders). Fees are generally a little lower than retail funds,
Industry funds still invest in the same way as retail funds – primarily in the stock market through managed funds..
Key points
- Stock Market Based: Investments typically utilise managed funds containing stocks and bonds on the share market
- Members: 13.7M Australians – 56.2%
- Assets Managed: 35.7% of the total wealth in super
- 2005 – 2021 average growth: 7.31%
If you’re in an industry fund, it’s also important to check the performance of your fund by comparing other options. A small change in your fund strategy can mean a big difference in your retirement lifestyle.
- Wealth management rank:5th
5 – Self Managed Funds
We’re very excited about SMSFs – We see outstanding results! SMSFs are for people who want to manage their own super. An SMSF can borrow money for investments (like a property). You choose where to invest your money.
With the increasing professional support from dedicated SMSF Accountants, it’s now reasonably easy to set up and run an SMSF.
Key points
- Your choice of investment: Investments options need to be within guidelines (speak to an accountant) – but you generally have access to most, stocks, bonds, property, crypto and managed funds.
- Members: 1.1 Million Australians – 4.5%
- Assets Managed: 24.7% of the total wealth in super.
If you have an SMSF fund, you will need the support of a good SMSF accountant to set up and run your account. You are in control of your investments, so you should be aware of your super performance.
Aside from a good accountant, you may benefit from professional support with your chosen investment strategy.
- Wealth management rank: 1st
By definition – 50% of Super members experience performance that is lower than the average result. Your fund won’t tell you if it’s performing poorly. It’s up to you to know if your super is in the top 50%, or the bottom 50% of fund performances.
The chart above shows annual growth rates for both Industry and Retail super funds. There are several periods where members in these funds experienced shrinking super balances due to negative growth during a stock market crash.
Fund Comparison Charts
We’ve reviewed the available ATO and APRA figures to provide you with the facts on performance of each fund type over more than 20 years. These findings are surprising and not widely reported.
New super industry insights
We’ve found most reporting on the APRA figures are presented by large super funds and professionals that rely on business created by working with these funds.
We were not able find any articles that revealed the extent of low performance of retail or industry funds, so we put our analysts to the job in order to bring a fresh perspective for you to consider.
The chart below was developed by our team to compare the each fund type against another. Be prepared, you may be shocked at the findings.
We’ve always been excited by people taking control of their own investments, but even we were not expecting to see just how much more wealth was held in SMSF’s per million people. Compared to Industry funds, SMSFs have 8.6x more wealth, and compared to retail funds it’s 7x more wealth per million people.
It does go to show that those that take an active role in their super investments will ultimately outperform those that take a passive role with their super.
Industry funds surprisingly ranked lowest with only 83% of the wealth per million people compared to retail funds – and that’s despite having a higher average performance than retail funds. Sadly, Industry funds only hold 12% of the wealth per million members when compared to SMSFs. Retail doesn’t do much better with only 14%.
Public Sector members often receive greater super contributions than the average Australian, but it’s a surprise to see Corporate funds outperforming Public Sector, Retail and Industry funds. It’s a big win for Corporate fund members.
SMSF Quick facts
More people are setting up SMSF’s than ever. Last year over 14,700 net new funds were established. (see SMSF Establishment chart)
- Dedicated Accounting Australia has a growing base of dedicated SMSF Accountants that are systemising set up and management of funds. This means that members can focus on investment – and less on the administration of the fund.
- A popular option 1.1 Million (4.5%) Australians with nearly 600,000 Self Managed Funds and growing numbers every year are a great indicator that this option is well and truely main stream.
- Easier Entry As long as your contributions and investment returns cover fees and out perform other investments, there is no official minimum amount of super savings required to start an SMSF. It’s better to speak to an experience SMSF accountant rather than to accept news article reports.
- Your choice of investment This is by far the greatest thing about using an SMSF. It does mean that you need to be sure of your investment strategy, but with the right help it is possible to outperform mass market strategies.
- Borrowing access The ability to borrow within super is unique to SMSFs. With the power of leverage, its possible to double or triple the returns of your actual super savings over sufficient time.
- Residential property investment The ATO figures show $49.8 Billion invested in residential property. That’s equivalent to 100,000 properties valued at $498,000 each
Does Property Investment with Super Excite You?
When comparing the super funds, you do have an exciting range of options to choose from. It’s ultimately up to you how to invest your super to reach the retirement lifestyle you want to enjoy.
If you’ve owned property in the past, you already have experience. You also have a good feeling for the growth potential of property.
The hardest thing about property investment and super, is building your own team of professionals to support you towards your goals. Property specialists, Mortgage Brokers, Solicitors, Accountants and rental management agents become your partners in success. You’ll be leveraging their strengths, experience and expertise to achieve your goals of financial freedom in retirement.We find our clients get a great sense of pride and satisfaction once they’ve set up their property investment in super. It’s an exhilarating feeling to take control of your investments and your future. We’re here to be your professional support team.
