What sport has to do with finding your best super fund

Oct 23, 2022 | Financial coaching, Investment, Reflection, Superannuation

I often hear my clients tell me they want to be in the “best super fund” and make sure they do the “best investments”. Whilst I understand where this sentiment is coming from, I normally point to the fact that it’s simply not possible to be in the best super fund every month, quarter or year.

Instead, considering if, and how you can be in a high performing fund or investment is more achievable.

Sport is a lot like investing in super fund

Let me explain using a recent analogy I found myself making the other day. I was watching the AFL footy finals and please bear with me, whether you like the AFL or not, I think this comparison is reasonable.

Picture this, if you support a team you may want them to win the premiership every year. Question is, does that actually happen? Looking over the last 100 plus years you would say not.

The recipe of a high performing team

Instead, ask yourself, what would be a good outcome for your team?

Let’s say you will look over a 10-year period.

Well for me, I would like my team to win one premiership (more would be fine), finish in the top 4 about four times, in the top 8 at least seven or eight times. I would also not want the team to finish on the bottom of the pack, at all. This would be in a competition with 18 teams in total.

Now, how does that equate to super funds?

For super funds, that would mean being the best performer at least once, regularly in the top seven/eight and make it to the top four. I would only expect the fund to have a rare adventure outside the top 10.

How to compare super funds

This sounds pretty good right? But there are flaws in this analogy. Let me explain;

With football teams, they all have the same salary cap, the same number of players on a list, and the same number of players on a field. So, a comparison between teams is fair. Sure the makeup of each team may vary in age and ability but the constructs are the same.

Unfortunately, with super funds our comparisons are not as like for like.

If we use the ATO’s your super tool we can get a comparison of funds and the performance of their default investment option. The comparison generates a similar ladder to a football league or competition.

Do your analysis when choosing a super fund

However, a big difference is that not all default investment options are the same.

They can have extra weighting to growth assets (shares and property etc) and within those growth assets different weights between say Australian and International shares and listed and unlisted property assets. Funds have different fee structures as well and different numbers of members and different fund sizes in asset terms.

So, a raw number or return doesn’t tell the full story. It’s not as simple as focusing on finding the best, better to look at what is appropriate for you in terms of the investment option selected, the cost and the performance.

Instead, comparisons for investments need to dig deeper. It’s the only way to get as close to a like-for-like comparison as possible. This is where having a financial advisor can be helpful if you find yourself stuck and need industry expertise.

In the end, when choosing your super fund and investment options, you can’t win the premiership every year but you should aim for being part of the high performing team.

Simon,
Financial Advisor and Founder – Core IFA

About the author

Simon Duigan is an Independent Financial Advisor and owner of Core Independent Financial Advice (Core IFA). Core IFA is 100% independent and receives no commissions or benefits from any product providers or financial institutions.. Instead, you can be confident that Core IFA have your best interests at heart.

2 Comments

  1. David Brereton

    Love the football analogy Simon, I hope my Super fund performs better than my team (Carlton) has over the past 10 years!!. Cheers

    Reply
    • Simon Duigan

      Thanks David and 27 years between Carlton premierships means one could be due. I suggest over that timeframe keeping the faith with your team rather than your super fund.

      Reply

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