Although 2011 was another disappointing year for super fund members, industry funds once again delivered better returns than their retail counterparts.
 
Unlike retail funds, industry funds are member-owned and not-for-profit. The retail versus industry fund comparison is analogous to credit unions and banks. About half of the country’s workforce (about five million people) uses an industry fund for their superannuation.
 
A report released by superannuation research firm Chant West found that the average return from an industry fund declined by 0.7% in 2011. The average decline among retail funds was a much more substantial 3.1%.
 
Of Chant West’s list of top ten balanced growth funds, only seven produced a positive return. In their analysis, Chant West found QSuper, a fund for those employed by the Queensland government, produced the highest one-year return of 2.6%.
 
This is the second year in a row that industry funds have beat their retail rivals; and the sixth time in the past decade.
 
Chant West’s Mano Mohankumar says that industry funds tend to invest in “unlisted assets” such as buildings and private equity funds, and have less exposure in ASX-listed shares which performed poorly last year.
 
“Over the longer term, the strategic allocation policies of industry funds have served them very well,’ says director Warren Chant.
 
Australian shares fell by 11% in 2011, and international shares dropped 5%. “The average returns over 5, 7 and even ten years don’t look particularly healthy, but everyone needs to remember that they are dominated by the ‘black swan’ event that was the GFC” says Chant.
 
Sweet super funds
 
In our recent comparison of super stars, these industry super funds topped the YMM list:
 
1. Hostplus
• Member fee: $78
• Asset administration fee: nil
• Investment fee: 0.7%
• 10-year balanced return: 6.1%
 
2. CareSuper
• Member fee: $78
• Asset administration fee: 0.2% (capped at $500)
• Investment fee: 0.76%
• 10-year balanced return: 6.6%
 
3. REST
• Member fee: $52
• Asset administration fee: 0.1%
• Investment fee: 0.7%
• 10-year balanced return: 7%
 
-- By Stephanie Hanna

 

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