There are a lot of superannuation funds in Australia so it seems there is plenty of choice for people.
A quick search on Google gave me a page with hundreds of different funds:
http://www.selectingsuper.com.au/Provider_profiles.html
But what I will address in this blog post, following from the previous, is whether it was theoretically better to invest in the average market (i.e. the S&P/ASX300 index for example) or in a super fund over the past 3 years.
Here is a table below with my findings. I only included a couple of Super companies as I don't have all day to analyse all of them - there are just too many. I used data from the following website to make the table:
http://www.moneymanager.com.au/tools/compare/findasuperfund.html
| | 1 YEAR return (2009 - 2010) | 3 YEAR annualized (2007 - 2010) | ||
| S&P/ASX300 | 29.33% | -7.94% | ||
| | How many funds | How many funds | How many funds | How many funds |
| | beat the ASX300? | had -ve returns? | beat the ASX300? | had -ve returns? |
| ANZ | 4 / 5 | 1 / 5 | 0 / 5 | 5 / 5 |
| Colonial First State | 47 / 150 | 18 / 150 | 105 / 150 | 115 / 150 |
| ING Australia | 59 / 250 | 16 /250 | 189 / 250 | 182 / 250 |
| Macquarie | 8 / 47 | 6 / 47 | 37 /47 | 30 / 47 |
| MLC (NAB) | 21 / 81 | 7 / 81 | 57 / 81 | 56 / 81 |
| Total Findings | 139 / 533 | 48 / 533 | 388 / 533 | 388 / 533 |
| Total Findings % | 26.1% | 9.0% | 72.8% | 72.8% |
As can be seen from the table above, a staggering 72.8% of people have been losing money on their super every year over the past 3 years (this is solely due to the Global Financial Crisis). Another finding that sticks out to me from the table is that fund managers exercised extreme caution over the 2009 - 2010 period as shown by the low 26.1% of funds that actually beat the ASX300. This means that fund managers became more risk-averse after the shocks of 2008. Even with the market rebounding last year, approximately 9% managed to still lose money!
So what is the main investment strategy to take away from this short analysis? I would advise people to lock their super money in risk-free bonds or bank accounts that earn a low rate of 1% - 3% and to wait until there is a massive correction in the markets, as occurred over 2008. The beauty of this strategy is that over your lifetime there will be many busts and bubbles and you can profit from all of them - after all, YOU control the risk profile of your super fund! Nowadays it is very easy to organise where your super is invested in.
This strategy will work best with the idea in mind that superannuation is NOT the major solution to retirement money. You must work on acquiring assets that generate positive cash flows - this way you will have a stream of steady cash in retirement in case if your super fund fails. Now all I gotta do is take my own advice and see if it works!
As a side note, an interesting link I found is this one:
http://www.choice.com.au/Reviews-and-Tests/Money/Investing/Products/Ethical-investing/Page/Introduction.aspx
It talks about how some funds only invest in "ethical" companies due to investor demand. An interesting side to the super industry.
K
No comments:
Post a Comment