Vanguard’s new low-fee super fund: 3 things to consider before switching
Investment giant Vanguard has launched a superannuation fund in Australia with low fees and based on index investments.
Global investment manager Vanguard, well known for its range of exchange-traded funds (ETFs), has officially launched a new superannuation fund in Australia.
Vanguard is known for its low-cost index funds that allow retail investors to access hundreds of local and global stocks with just one trade.
If you're keen to switch to the new Vanguard Super product, here are 3 things to know about the fund first.
1. Vanguard Super has a range of investment options, based on index funds
Vanguard Super offers a range of diversified investment options to choose from as well as a lifecycle product and individual asset class options.
The default MySuper product is a lifecycle fund that invests your super into a mix of asset classes based on your age.
When you're under 50, you'll be mainly invested in growth assets with a small amount of defensive assets too.
As you approach 50 your asset allocation will continue to change each year so you're invested in fewer high-risk growth assets as you get closer to retirement. This is done automatically for you and there are no switching or adjusting fees for this.
As well as the lifecycle product Vanguard Super also offers high growth, ethically conscious growth, growth, balanced and conservative options. All Vanguard's super options are based on index investing, with a mix of different ETFs and index funds.
2. Vanguard Super fees are very low
Because Vanguard Super's investments are based on index funds, the fees are very low.
Investing via index funds is low cost as it's more passively managed, compared to a fund that has investment managers actively hand-picking each stock.
Vanguard Super lifecycle fees are 0.58% p.a., which adds up to an annual fee of $290 based on a $50,000 balance.
In comparison, AustralianSuper's default balanced fund has fees of $447 based on a $50,000 balance and Hostplus charges $648.
3. The performance returns aren't available just yet
Vanguard Super is a brand new super fund, so there are no past performance figures available yet. However, Vanguard ETFs have tended to perform well over the long term.
If you haven't checked your super in a while, now's a great time to compare super funds and make sure you're in a fund with low fees and strong returns.
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The information in this table is based on data provided by SuperRatings Pty Limited ABN 95 100 192 283, a Corporate Authorised Representative (CAR No.1309956) of Lonsec Research Pty Ltd ABN 11 151 658 561, Australian Financial Services Licence No. 421445. In limited instances, where data is not available from SuperRatings for a product, the data is provided directly by the superannuation fund.
*Past performance data and fee data is for the period ending September 2024