Should you really move superfunds?

At this time of year, many people consider moving superfunds — especially if those end-of-year letters from the superfund are… disappointing, to say the least. Almost all superfunds are going to be showing red this year, but like all financial decisions, the choice to move superfunds should not be rushed. 

Let’s look at five factors to consider when thinking about changing superfunds. In the end, you might realise your current situation isn’t as bad as you think.   

First, define “bad”.

How bad was it, really? Australian shares, international shares, and international property were off by about 6.5%, while Australian property was down more than 11%. Fixed interest/bond markets were off between about 9% - 13%, and official cash returns were only just above zero. 

True, market returns were terrible, but that isn’t your superfund's fault. All superfunds are in the same position here, so in a way, it doesn’t really matter what fund you’re with. 

Considering all of that, the average superfund member will be in "balanced" or "moderate" funds. This has about 60% - 70% of your money in growth assets and 30% - 40% in defensive assets. Returns across the board were going to average around 10.5% for the year. So, if your fund did better than that, it actually performed above average. 

Think long-term thoughts. 

You’ve had one unfavourable year, but you should be focusing on the last five years (or longer) for an accurate return picture. Even with the most recent year dragging everything down, your previous five returns should average at least 4%. If your superfund is performing around that number, or even 2% lower, you're not in the worst-performing funds. 

Don’t chase returns. 

If you're researching other superfunds, don't get sucked into chasing returns just because one did comparatively well last year. This doesn’t mean they’ll perform well every year, which is why it’s important to consider long-term returns with your current fund (and others you’re thinking about). 

Don’t dismiss insurance.

If you consolidate multiple superfunds, you’ve probably unknowingly cancelled a lot of important insurance at the same time. This is particularly dangerous if you need insurance. For example, if someone under the age of 55 or with dependents has health issues, they might not be able to get replacement insurance. So, please don't close any superfund before you've considered your insurance! 

Investment options. 

In your fund investigations, make sure there are a range of investment options. The more the better! You at least need enough to be aggressive with your investments in the future (if you want to be). 

Want more superfund support? 

If you go swapping funds hastily, you could end up in a worse position. The best way to explore your options and ensure you’re making an informed decision is by getting an expert opinion. That’s where we come in — contact us today.