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Are industry super funds better than commercial funds?

A family member is always arguing that industry super funds are better than funds run by the big financial institutions. What do you think? And do you think I should go for a growth or balanced fund?

It’s hard to simply say all industry funds are better than funds run by financial institutions. Many industry funds in the balanced and growth categories have topped the ratings tables.

Over recent years, industry funds have outperformed financial institution funds and they tend to be cheaper, but not all industry funds have been great performers and that’s why it’s hard to generalise.

Also, some analysts argue that financial institution funds have to buy assets that are marked-to-market while industry funds can buy property, which is valued more subjectively.

Whether you should opt for a growth or balanced or capital stable fund, it does depend on your age. Younger people are encouraged to go growth. Middle-aged members might be in the balanced category, while as you get closer to retirement a more conservative, a capital stable option tends to be the way to go.

In selecting your fund, it might good to see what ASIC says are the average returns for different kinds of super funds. If you need to build up your fund for retirement, growth or balanced funds are the way to go.

Also note that a great balanced fund can come in close to growth funds with less risk! Have a look at the performance tables produced by Super Ratings and Morningstar, and then consider the costs charged, and also look at the insurance that goes with each fund. Some people switch funds and end up leaving a great insurance policy for a poor one or none at all.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

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Published on: Tuesday, December 14, 2010

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