I’ve been getting a lot of questions lately, and seen similar conversations on social media, around “What’s the best superfund?” And this question relates mostly to industry super funds.
This got me wondering…. why have we got so much talk around this topic in the last few weeks? And the reason I think is quite simple.
If you’re with one of the industry super funds, you may have received an interim statement of your super account’s performance, for the last 6 months of 2018, and if so, I expect this would have shown a negative return. This has got some people alarmed and some are looking around for better options because they think their super fund has underperformed.
But let me put this into context….
Firstly, most industry super funds, assuming you are in their default “MySuper”, or sometimes called “Balanced” option, will have around 70% invested in shares. Some a little more, some a little less. This means a large percentage of your balance will go up and down with the share markets.
Now keep that in mind, and let’s look at the Australian share market over the last 12 months.
The last 6 months of 2018 saw a drop from 6237 to 5709, a drop of nearly 8.5%. In international markets, the S&P500 was down 8%, the Dow Jones 4% and the NASDAQ down 12% over the same period.
So it’s perhaps not surprising that most, if not all industry super fund default options returned a negative result over this period.
But remember, markets move in cycles and this is perfectly normal. The last 9 months or so have been the perfect example of this. The good news is that since the start of 2019, the markets have recovered the losses of the previous quarter and are back up in positive territory over the last 12 month period.
So my message today is make sure you don’t get distracted by your super fund’s latest statement. Focus on the longer term returns and before moving to another fund, there are other important considerations to factor in. You need to consider the suitability of the investment options, and equally (or perhaps more) important…you may have insurances held in your super that may be impacted.
So before switching, do yourself a favour and speak to an adviser to look at all these factors and they can help you determine the most appropriate option for you.
If you’d like to discuss your superannuation funds further, feel free to get in touch. We’d love to help you make an informed choice.