Industry super outperforms bank-owned funds

Peter Terlato 24 November 2016

time clock savings money returns investment superannuation

Long-term investments and "unlisted" assets pay off with bigger returns.

Industry superannuation funds' not-for-profit structure and long-term investment strategies have paid off for members, delivering greater returns than bank-owned funds, according to new research.

Independent ratings agency Super Ratings has revealed new data which shows over a 10-year period industry super funds consistently outperform bank-owned funds by around 2%.

1 Year3 Year5 Year7 Year10 Year
Industry super funds4.51%7.12%9.31%7.94%5.37%
Bank-owned super funds2.01%4.92%7.38%5.95%3.07%
Outperformance2.50%2.20%1.93%1.99%2.30%

Industry super's performance is greatest over the short term, with first year returns 2.5% higher than that of bank-owned funds. Over three years the gap is tightened to 2.2% but extends to 2.3% after 10 years.

Industry super trustee board members consist of union and employer group representatives, whereas bank-owned funds employ finance professionals.

"Industry super funds delivered better returns to members because their trustee boards are committed to investing for the long term in infrastructure and other 'unlisted' assets such as property, and returning all profits to members," Industry Super Australia chief executive David Whiteley said.

"Industry super funds are deliberately different to the major banks, and will resist any proposals to make their structures and culture more like the banking sector," Whiteley said.

Many of Australia's largest superannuation funds, predominantly managed by the big four banks, have underperformed and under-delivered over the past five years, earning the moniker "fat cat funds".

Satisfaction with industry super funds continues to outshine that of retail funds.

Research released by APRA in September found Australia's retirement savings pool would have been $105 billion better off if retail funds matched industry fund returns over the last two decades.

With an average balance of around $1.2 million and a proclivity for diversifying investments to spur capital growth, satisfaction among SMSFs is gaining momentum at the top end of the scale.

If you're looking to switch funds, consolidate your super, better manage your self-employed savings or take out income protection for your nest egg, it's best to compare options and make the right decision.

Latest superannuation headlines

Picture: Shutterstock

More great ideas from finder.com.au

Get a life insurance quote
Get a life insurance quote

Find out what it costs to protect yourself and your family

More info...
Refinancing home loans
Refinancing home loans

Choose from offers with rates as low as 3.39% p.a.

More info...
Google Pixel
Google Pixel

Compare plans for Google's flagship Android phone

More info...
Christmas ideas
Christmas ideas

Visit our Christmas homepage for gift ideas, markets, travel & deals

More info...

Ask a Question

You are about to post a question on finder.com.au

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At finder.com.au we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the finder.com.au privacy policy, receive follow up emails related to finder.com.au and to create a user account where further replies to your questions will be sent.

Ask a question
feedback