A word so boring that I almost fell asleep typing it.
A big reason superannuation is such a snoozefest is we can’t touch it for 30 + years.
The other reason is that the companies managing our super don’t exist to make us excited – they are largely homogeneous behemoths who know their clients are often too lazy to care.
In 2017 that all changed with a new wave of superannuation funds being launched specifically targeting a younger generation of investors. In this article we will take a detailed look at these new offerings and how they stack up against each other and the broader market.
How to Compare
Before we jump into our overview a bit about on how to compare super funds.
In our view there are only two factors that really matter when comparing these super funds:
- Fees – fees you pay in super can play a massive role on your retirement savings. Super funds main fees are charged as a % of total funds (for example – if a fund charges 1% and you have $100,000 with them you will be charged $1,000 per year).
- Investment Options – while too many options can become overkill, it’s good to have a variety of options too match your investment outlook.
You will notice we don’t consider performance – this is due to a couple factors – firstly the funds here are very new so there isn’t much performance to go on and secondly past performance is no indicator for future performance and, given the long-term nature of super, recent performance isn’t that useful.
On The Market
Spaceship was the first new wave superannuation fund to really make a splash. They launched just over a year ago and have already raised over $70m in venture capital. They received a lot of criticism when they first launched due to the exorbitant fees of their initial product offering.
Spaceship have responded well dropping the fees of their main product substantially (from 1.6% to 0.99%).
That is not to say the fund is perfect – they still only have 2 investment options and everyone who has rolled their super into Spaceship may have lost some valuable insurance with no encouragement to replace it. Below is a summary of their current investment options and fees:
|Investment Option||Type||Fixed Fee||% Based Fee|
|Growth X||High Risk / High Return||$78||0.99%|
|Global Index||High Risk / High Return||$78||0.65%|
Grow Super was hot on Spaceship’s heels launching a short time after. Their fees were also high when they launched but have since come down considerably with most of their investment options costing 0.95%.
Grow have 7 investment options to choose from so are superior to Spaceship in that regard. They are more transparent than Spaceship on how they will be managing their clients’ money. They also have a product which has some nifty little features (i.e projections, round ups etc) and an easy to use mobile application. Below is a list of their current investment options and fees – as you can see one of their options is substantially more expensive than their others (for no reason):
|Investment option||Type||Fixed Fee||% Based Fee|
|GROW MySuper||High Risk / High Return||0||1.33%|
|Grow 30||Low Risk / Low Return||$86||0.95%|
|Grow 40||Medium Risk / Medium Return||$86||0.95%|
|Grow 50||Medium Risk / Medium Return||$86||0.95%|
|Grow 60||High Risk / High Return||$86||0.95%|
|Grow 70||High Risk / High Return||$86||0.95%|
|Grow 80||High Risk / High Return||$86||0.95%|
|Grow 100||Very High Risk / High Return||$86||0.95%|
Raiz (Previously Acorns) – Updated 21-June 2018
Raiz, the popular micro-investing app that allows you to “invest spare change” has launched their very own superannuation product.
Their super product has got 6 investment options and, much like their existing investment application (read more about this here), each option invests in a combination of Exchange Traded Funds (ETFs). The super product is managed through their existing application which should make it easy to use and track and will also offer insurance. As per the table below, the fees range from 0.60% – 0.80% – the lowest out of the “new breed” of funds and very competitive against existing low cost super funds:
|Investment Option||Type||Fixed Fee||% Based Fee|
|Conservative||Low Risk / Low Return||$104||0.60%|
|Moderately Conservative||Medium Risk / Medium Return||$104||0.60%|
|Moderate||Medium Risk / Medium Return||$104||0.62%|
|Moderately Aggressive||High Risk / High Return||$104||0.64%|
|Aggressive||Very High Risk / High Return||$104||0.66%|
|Emerald (Ethical Portfolio)||High Risk / High Return||$104||0.80%|
It should be noted that Raiz’s fixed annual fee is higher than average – this impacts those with a lower super balance more however they don’t charge their 0.275% “investment fee” if the balance is less the $5,000 which offsets this somewhat.
Zuper – Updated 13-July 2018
One of Zuper’s biggest difference from the companies discussed so far is the ethical tilt towards their investment options.
One of their core investment options – Zuper Impact – doesn’t invest in tobacco and nuclear weapons while their other core portfolio – Zuper Impact + – also doesn’t invest in gambling, pornography, alcohol and fossil fuels. Along with these core portfolios are three “Tactical tilt” options – Health, Green and Tech.
Zuper have 15 investment options made up of a combination of their “Core” and “Tactical tilt” options. Depending on the investment choices made, fees can range from 0.99% to 1.17% – below is an example of 6 of these combinations and the fees charged:
|Investment Option||Type||% Based Fee|
|100% Zuper Impact||High Risk / High Return||0.99%|
|100 % Zuper Impact+||High Risk / High Return||1.09%|
|80% Zuper Impact+ |
20% Zuper Green
|High Risk / High Return||1.18%|
|80% Zuper Impact+|
10% Zuper Green
10% Zuper Health
|High Risk / High Return||1.17%|
|80% Zuper Impact|
20% Zuper Tech
|High Risk / High Return||1.07%|
|80% Zuper Impact+|
20% Zuper Health
|High Risk / High Return||1.16%|
Zuper doesn’t have a fixed fee which is beneficial for lower super balances – they also offer insurance and make it clear on where your money is invested.
Like Spaceship, Zuper doesn’t have any conservative portfolios (all of their portfolios have a minimum of 62% in equities) – this means it may not be suitable for members closer to retirement but works well for those with a longer investment horizon.
In the Works
Human Super is very focused on improving the large gap between what males and females retire with – an admirable goal. Human Super are predicting to launch in the second quarter of 2018 but have not released much about their product offering. According to this article, their will be two investment options initially – one charging 1% and the other charging 1.8% however it was written in July last year and much has changed since then.
Sprout Super are very much in “Stealth Mode” and have released very little information to date on what they are doing and how they plan to do it.
Why Should I Care?
At Plenty we obsess about getting you into a low fee superannuation fund – the reason is simple; fees play a HUGE impact on your retirement savings.
The chart below compares Spaceship to a high cost fund with AMP and the low cost fund we often recommend at Plenty. We assume all that have the same level of returns (7%). This example looks at the super balance of a couple who are aged 35, already have $50,000 in super, a household income of $125,000 and inflation of 3%:
The outcomes are as follows:
- In the fund Plenty often recommends the couple will retire with $1.9m
- In Spaceship the couple will retire with $1.8m
- In AMP the couple will retire with $1.6m
The difference in fees between AMP and Plenty’s recommended fund are just 0.9% per year yet the difference in retirement for a couple could be $300,000.
Of the new wave of super funds that have hit the market, Grow and Raiz looks like the best bet at this point. This is due to their competitive fees, wider range of investment options and transparency.
At Plenty we can analyse your current super arrangements and get you into a lower cost fund. Find out about our superannuation advice.
Josh is the co-founder of Plenty. Along with being a mortgage broker, he spent 5 years in banking and has an honours in Finance from UNSW. He loves all things tech and finance.
The information contained on this page is of a general nature and may not be appropriate for your personal circumstances. You should obtain personal financial advice before acting on this information.