A timely reminder was delivered this week by research house Investment Trends. Their research found that only 7% of Australians changed their superannuation accounts this year. Some reporting of this finding has suggested that Australians are not focused on their superannuation investments and not being proactive in trying to find the very best in superannuation fund returns. This is even after the recent barrage of advertisements and news about he superannuation system from the government as well as the Industry Super industry.
In some ways I can understand the reasons behind this finding. When talking to family and friends, the topic turns to the investment world with discussions about shares, property, margin and investment loans and the current media topics tending to take centre stage. Superannuation is generally not a high priority. I guess this is partially based on a historical perspective where superannuants found themselves in defined benefit type schemes where they basically knew what their superannuation would be worth on retirement and investment returns were not important. As these defined benefit style schemes disappear I imagine that the focus on investment returns within super will become more acute.
I also guess that another aspect to the story is that superannuation is not seen as a direct part of the investment portfolio held by investors. Employers pay money into a fund and you can not access the money until 55. The younger you are, the easier it is to forget about your superannuation fund being a part of your investment story.
In a strategic planning sense, there are also good reasons not to be chopping and changing your investments and investment managers in superannuation based on the search for better returns. Research has shown that this 'active' style approach to investing actually leads to a worse investment outcome because of transaction costs and investors 'not being in their seats' when investment markets turn.
However, there are also some very good reasons to be at least considering changing your superannuation fund. As with all investments these factors are the fees or costs of investing and the investment approach undertaken.
APRA have recently released the 10 year returns for the industry up to 30 June 2006. The data showed that public sector super funds have beaten the field over the past 10 years, followed by corporate and industry funds with retail funds bring up the rear. No surprises that retail funds tend to be the higher cost funds in the field.
As you read further through our website you will find that we also believe that having an investment philosophy based on the best available academic research is also essential.
If you are not sure whether your superannuation fund has reasonable costs or is using the very best research to develop investment portfolios, I encourage you to take a look at your fund in more detail.