Super fund opens its doors to SMSF investors

Super fund opens its doors to SMSF investors

Hostplus has launched a new product that allows Australians with self-managed superannuation funds to invest through a professional super group.

The Self-Managed Invest product allows SMSF members to pool their funds with Hostplus, as unitholders in six of its 23 investment options:

  • Balanced
  • Indexed Balanced
  • Australian Infrastructure
  • Industry Super Property Trust – Australian Property
  • Infrastructure
  • Property

Hostplus chief executive David Elia said SMSF members who invest through Self-Managed Invest will also gain other benefits, including:

  • Access to assets ordinarily unavailable to retail investors
  • Reduced administrative, compliance and reporting responsibilities

“We believe this is an Australian-first, and is an innovative and practical demonstration of how two of Australia’s largest superannuation and pension sectors can work together for the mutual benefit of DIY investors and our fund members alike,” he said.

Why you might want to switch your super

One of the most important financial decisions someone can make is to compare super funds – and then, potentially, change funds.

Over the course of a 45-year career, a small difference in annual returns, fees and charges can produce big differences in the size of your final nest egg.

For example, imagine you have a $75,000 salary for your entire career, which would mean receiving $7,125 of superannuation per year. Let’s also assume your fund has a ‘medium’ level of fees and charges, which would mean a contribution fee of 0 per cent, an admin fee of $50 per year and an indirect cost ratio of 0.6 per cent. Here’s how much you would have after 45 years based on different investment scenarios:

Investment option Investment return (p.a.) Tax on earning Investment fees Final total
Cash 2.7% 15.0% 0.05% $224,356
Conservative 3.8% 10.6% 0.3% $262,498
Moderate 4.4% 8.3% 0.4% $290,557
Balanced 4.8% 6.5% 0.5% $311,299
Growth 5.0% 5.8% 0.6% $319,297
High growth 5.3% 4.1% 0.7% $337,268

Source: ASIC superannuation calculator

To highlight the impact of fees, let’s compare different fee scenarios. This time, we’ll model just the ‘balanced’ option, which comes with an investment return of 4.8 per cent, a tax on earning of 6.5 per cent and investment fees of 0.5 per cent.

Fee level Contribution fee Admin fee (p.a.) Indirect cost ratio Final total
High 4% $0 2% $238,215
Medium-high 2% $0 1.3% $272,623
Medium 0% $50 0.6% $311,299
Low-medium 0% $50 0.3% $327,854
Low 0% $50 0% $345,537

Source: ASIC superannuation calculator

There are many super funds to choose from

So, should you stay with your super fund or switch?

That depends on how your current provider compares to the many other options in the market.

Check your latest statement to find out how your fund is performing. To make an accurate comparison, you should probably look at investment returns over a period of at least five years, to filter out any short-term fluctuations.

If you discover that your fund has been underperforming, it might be time to find another super fund.

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