One up (My SMSF) against Super Funds

Like most individuals, during my early (working) years, I took no interest in my Superannuation. Back then, I had no idea about who my super provider was, where or how it was invested, or how much fees (excessive) was I paying.

As I educated myself I learnt that very few (less than 1%) active funds manage to beat their benchmark index over a long period of time. I also realised that excessive fees charged by actively managed funds erode the wealth of the uninformed investors.

Upon learning the fallacies (part-1 and part-2) of actively managed super fund, I rolled over both my and partners super to ING Direct Living Super, which allowed me to invest in broad-market based ETF. ING living Super allowed me to invest in listed ASX 200 securities (stocks) and selected ETFs.

As I gained experience I found the choice of ETFs offered by ING too restrictive. I was unable to invest in VAS.AX (cheapest ASX 300 ETFs) since it was not on the list of selected ETFs.

ING Direct Living Super restricts investor to a maximum of 20% of total account balance in any one share. This is a well though out policy which protects the investor from the mistake of putting all eggs in one basket. However, when it comes to ETFs, this makes no sense since investing in a single ETF like VAS.AX provides a wide diversification of 300 stocks.

ING direct charges a reasonable trading platform fee (fixed) of $180 per annum and has a minimum brokerage fee of $20 for every trade. To keep transaction costs down, I let funds accumulate in my super throughout the year and purchased additional shares once every year. As a result of 20% rule, I was forced to make four trades (instead of one) which increased my brokerage fees from $20 to $80 per year.

The fact that me and my partner were required to maintain separate super (APRA) accounts meant that together we were paying the same set of fees twice.

Because of the reasons outlined above, I established my SMSF in late 2013.

It is now time to review the performance returns against the performance of actively managed super funds. For the year, 2014 My SMSF (highlighted in the table below) delivered a return of 11.70%. The return figure is net of all costs:
  • Transaction cost ($20)
  • Super Admin cost ($0) 
    • My Super administration provider waived off the super admin fees for the first year. If I consider the administration fees ($699), then the net return comes at 10.30%.
  • ATO levy 
  • Tax (@15%)
The table below ranks the performance of 119 super funds between 1st Jan 2014 to 31st Dec 2014.
Investment OptionAsset ConsultantGrowth Assets (%)1 Year
QSuper BalancedQSuper6112.7
VAS ASX 300NA11.70
IOOF Balanced Investor TrustRussell7010.9
UniSuper BalancedUniSuper7010
Kinetic Super AggressiveTowers Watson76.59.9
AMP Future Directions BalancedTowers Watson739.8
Intrust Super BalancedJANA759.7
Statewide Super MySuperJANA809.7
Kinetic Super GrowthTowers Watson629.6
Statewide Super Active BalancedJANA709.6
VicSuper Growth (MySuper)Frontier759.5
CFS FirstChoice GrowthMercer809.5
CFS FirstChoice BalancedMercer709.5
Telstra Super BalancedJANA749.4
HOSTPLUS BalancedJANA769.3
MLC GrowthJANA799.2
Catholic Super Mod. AggressiveJANA809.2
REI Super Trustee Super Balanced (MySuper)Ibbotson799.1
MTAA My AutoSuper (Balanced)Access67.59
MLC Horizon 4MLC68.59
Energy Super BalancedJANA759
Tasplan MySuper BalancedMercer709
AustralianSuper BalancedFrontier/JANA768.9
JANA AssertiveJANA808.8
Auscoal GrowthMercer808.8
Plum Pre-Mixed ModerateJANA708.8
Equip Balanced GrowthJANA708.8
MLC MySuperJANA708.8
LGSS Balanced GrowthJANA708.7
AustSafe MySuper (Balanced)JANA70.58.7
AMP RIL BalancedTowers Watson698.7
Catholic Super Balanced (MySuper)JANA708.6
UniSuper Capital StableUniSuper308.6
MLC ModerateJANA708.5
CBUS Growth (Cbus MySuper)Frontier738.5
Suncorp GrowthIbbotson808.5
IOOF MultiMix Balanced GrowthRussell728.5
JANA ModerateJANA708.4
REST DiversifiedJANA808.4
VicSuper Capital StableFrontier408.4
OnePath OptiMix BalancedMercer/TW738.3
Mercer GrowthMercer688.3
BUSS (Q) Balanced GrowthFrontier72.58.3
GESB Super Balanced GrowthJANA748.3
RBF Tasmania BalancedJANA738.3
CareSuper BalancedJANA698.3
Plum MySuperJANA708.3
AMP ipac SD BalancedTowers Watson698.1
Aust Catholic Super & Ret MySuper BalancedTowers Watson748
Maritime Super BalancedJANA708
ESSSuper GrowthTowers Watson808
EISS DiversifiedMercer707.9
Vision Super Balanced GrowthFrontier74.57.8
HESTA Core PoolFrontier737.8
GESB Super BalancedJANA627.8
Telstra Super ConservativeJANA407.8
REST CoreJANA767.7
Energy Super Capital ManagedJANA357.7
LUCRF MySuper BalancedTowers Watson767.6
Sunsuper BalancedMercer70.57.6
FSS (NSW) DiversifiedTowers Watson707.6
AMP Future Directions ConservativeTowers Watson327.5
Tasplan ST DefensiveMercer307.5
Sunsuper GrowthMercer79.57.3
OnePath OptiMix ConservativeMercer/TW337.3
QSuper ModerateQSuper367.3
Optimum GrowthIbbotson807.2
Auscoal StableMercer407.2
Russell BalancedRussell747.1
CFS FirstChoice ConservativeMercer307.1
Equip ConservativeJANA307.1
Mercer Growth PlusMercer66.57
Intrust Super StableJANA307
Statewide Super ConservativeJANA307
Russell Balanced OppsRussell75.56.9
Mercer Conservative GrowthMercer266.9
AMP RIL ConservativeTowers Watson276.9
AMIST BalancedJANA706.8
AustralianSuper StableFrontier/JANA366.8
Commonwealth Bank Group Super Mix 70Towers Watson706.7
RBF Tasmania ConservativeJANA35.56.7
Asgard SMA BalancedAdvance/TW706.6
NGS Super Diversified (MySuper)n.a.706.6
MTAA ConservativeAccess276.6
EISS Capital GuardedMercer306.6
IOOF MultiMix ConservativeRussell306.6
BT MM BalancedAdvance/TW706.5
AMP ipac SD SecureTowers Watson306.5
REST Capital StableJANA356.5
HOSTPLUS Capital StableJANA306.5
AMIST Capital StableJANA306.5
Suncorp ConservativeIbbotson366.5
CBUS ConservativeFrontier316.4
LGSS ConservativeJANA306.3
MLC ConservativeJANA306.3
Legal Super ConservativeTowers Watson356.3
JANA ConservativeJANA326.3
Vision Super ConservativeFrontier356.3
BUSS (Q) DefensiveFrontier386.3
HESTA ConservativeFrontier35.56.2
FSS (NSW) Capital GuardedTowers Watson256.1
CareSuper Capital StableJANA32.56.1
AustSafe Capital StableJANA326
GESB Super ConservativeJANA376
Plum Pre-Mixed ConservativeJANA305.9
Catholic Super ConservativeJANA255.9
Russell ConservativeRussell36.55.8
Optimum Consv GrowthIbbotson365.7
MLC Horizon 2MLC29.55.7
Optimum Consv Growth PlusIbbotson365.6
Maritime Super ConservativeJANA305.6
NGS Super Defensiven.a.325.5
REI Super Super StableIbbotson365.4
Asgard SMA DefensiveAdvance/TW305.4
ESSSuper ConservativeTowers Watson355.4
LUCRF ConservativeTowers Watson305.4
Aust Catholic Super & Ret ConservativeTowers Watson295.2
Sunsuper ConservativeMercer275.2
Commonwealth Bank Group Super Mix 30Towers Watson305.2
BT MM ConservativeAdvance/TW305.1
* The performance figures are from Chant West
* Returns are expressed net of investment fees and tax
* Growth and conservative growth portfolios are defined as having growth assets of >60% <=80% and >=20%<=40% respectively

Full Disclaimer: I am not a financial planner. The views expressed in this post are all mine and they may or may not suit your needs. Please do you own due diligence. I do not make money on any of the products suggested in this post.

3 comments :

  1. Do you only hold VAS in your SMSF? Interested in your thoughts around home bias, and massive concentration to Aussie banks

    I think to compare apples-with-apples, you should add in the ATO levy and other related costs to your total cost of running your SMSF. Bc within an APRA fund, we should also look at the all in costs including the admin fee (something like $75 p.a.) to make the calculation true.

    ReplyDelete
  2. Hi Jeremy,

    Thanks for passing by.

    My portfolio at the moment is 50:50 split between VAS.AX and VTS.AX. The performance above includes all costs of running SMSF including ATO levy and brokerage.

    Cheers,
    Karsh

    ReplyDelete
  3. Cool. I see

    Do you have a strategy around rebalancing? Do you top up to reach target allocation (50:50) every quarter when Super Contribution drops in (assuming you are not self employed)? Or do you have a more systematic approach?

    ReplyDelete

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