After the worst, here’s the best: Australia’s top 10 super funds

For the 1.1 million workers who will soon receive a letter from their ‘dud’ super fund advising them to switch, it might be worth knowing which are Australia’s best.

Australia’s top 10 funds had annual returns in excess of 8.75 per cent over the past seven years.

After appearing on the government’s ‘dud’ list this week, Australia’s worst super funds are now preparing to write to their members suggesting they switch to a better-performing fund.

For those 1.1 million workers who will receive the confronting letter later this month, it might be worth noting which funds came out on top for investment performance.

According to the new performance test, the results of which were released on Tuesday, the best super fund by net annual investment return over a seven-year period was Active Super, formerly known as Local Government Super, with a 9.46 per cent return.

A close second was the nation’s biggest super fund, the $200bn behemoth AustralianSuper, which returned 9.44 per cent per year on average over the past seven years.

In third place was Hostplus, with a 9.33 per cent return.

Of the top 10 funds (see the full list below), the lowest average annual return over the seven-year period came in at 8.75 per cent.

These figures are based on a 30-year-old worker with a super balance of $50,000.

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Best funds (by investment performance)

• Active Super: 9.46%
• AustralianSuper: 9.44%
• Hostplus: 9.33%
• AON Master Trust: 9.14%
• Goldman Sachs & JBWere Super Fund: 9.13%
• Unisuper: 9.01%
• Cbus: 9%
• Mine Super: 8.86%
• QSuper: 8.8%
• Retirement Wrap Westpac Group: 8.75%

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This compares with the 13 ‘duds’ named and shamed this week: the worst of these on a return basis was EISS, which delivered an average annual return of just 6 per cent.

The new test, brought in as part of the government’s Your Future, Your Super reforms, revealed that these 13 funds, of 76 funds assessed, failed the crucial evaluation and will now have 28 days to write to their members detailing their failure and suggesting they switch funds to get a better retirement outcome.

The named-and-shamed funds include AMG Super, LUCRF, Colonial First State’s First Choice Employer Super Fund, Maritime Super, Christian Super, Commonwealth Bank Group Super and EISS Super.

All up, $56.2bn of 1.1 million workers’ retirement savings are invested in the underperforming funds.

The MySuper products were assessed on both investment performance and administration fees. But while the investment portion of the test spanned the past seven years, only the most recent year’s admin fees were included, after a government backflip just weeks ago.

The longer time frame for judging investment performance was to allow funds to target long-term returns and not blame “one bad year” for underperformance, according to the government.

The named-and-shamed funds will in the coming weeks send letters to members stating: “Your superannuation product has performed poorly under an annual performance test that was introduced by the Australian government … we are required to write to you and suggest you consider moving your money into a different superannuation product.”

If the funds fail again next year, they will no longer be allowed to accept new members. What’s more, the funds aren’t told why they failed: they are simply given a pass/fail mark.