How Do You Determine Superannuation Performance?

And Who Should be in Control?

By Jason Fittler

First, we need to define the word, “performance.” Performance is not based on one thing but a combination of activities. All focused on achieving a specific end result.

Retail and Industry Funds

Retail funds and industry funds market their performance on individual indicators. But are they relevant to you? Here are the four main ways they market:

  1. The low fee crowd. They tell you the only difference in performance is the fees. Because you can’t beat the market. If this is the case, why are there wealthy and poor people?
  2. The beating an index crowd. They benchmark their performance against some obscure index that has nothing to do with your risk profile or return.  When they beat this index they charge you more.
  3. The fear crowd. They tell you it is not about making money, but more about not losing it.  They offer ultra safe investments. All investments have risk.
  4. The cherry pickers. They provide you information on the performance of their investments by choosing the date when the investment has best performed. This has no relevance to current performance indicators. 

You are lead to believe that performance should be compared and measured against everyone else. This makes no sense. Performance is only relevant to you and what you are looking to achieve, your goals and your outcome.

Self-Managed Superannuation Funds

So how have SMSF performed against retail funds and industry funds? Back in 2011 a study was completed which showed that SMSF’s did outperform but this is of little importance as each fund is run by the individual for one purpose.

Some interesting facts about SMSF’s are that:

  • The average balance of a SMSF is over $1 million dollars.
  • Around $5 billion is invested in SMSF.
  • Around 2750 new SMSF are being set up each month.
  • SMSF is the fastest growing sector in the superannuation industry.

The key point is that SMSF’s have larger balances than industry and retail super funds.

The question you should be asking is why?

SMSF’s have larger balances as the investors are focused on achieving their goal of retiring comfortably. They are focused on reducing fees, saving, reducing tax, and improving the performance of their investments. Performance is not based on one thing it is a combination of activities. All focused on achieving a specific end result.

If you want to focus on low fees, chase last year’s winners. But don’t complain when you fail to get the performance you are looking for.

The people whose superannuation outperforms are the ones who “Take Control” and focus on achieving their goals.

Don’t leave it to others to look after your retirement.

Take control.

For more information on SMSF's register for our upcoming SMSF workshop. For details call me on (07) 4771 4577.