Who's the better driver: Daniel Riccardo or me?

According to YourSuper, I could be!

Two of the mainstream media outlets ran similar articles last week. Both were confused by YourSuper's approach to listing funds by performance. The articles both compared the returns of a "High Growth" fund with "Balanced" funds, and suggested you'd be better off in Active Super than AustralianSuper or HostPlus because Active Super's returns were higher.

This is like picking me as the better performing driver because my lap time in a Ferrari was better than Daniel Riccardo's time in a go-kart.

Its not the media's fault however. This is the confusion that YourSuper is creating by limiting its comparisons to MySuper funds only.

Because the LifeCycle funds have set up each strategy as MySuper, it means super funds like Active have their High Growth strategy in the YourSuper comparisons. Funds without LifeCycle options as MySuper accounts, like AustralianSuper and HostPlus (the other two in the media articles), have their default options (Balanced strategies) listed in YourSuper.

So the comparison of all MySuper funds is a comparison of apples and pears (or Ferrari lap-times with go-kart lap times). Yes they give the right warnings, but people don't understand the warnings. And confusion reigns.

Running with the example of a 30yo used by the media articles, if they wanted a High Growth fund, they could switch to AustralianSuper's high growth strategy, which has returned 10.51%pa over the past ten years after all fees, a massive 1.46%pa difference to the equivalent Active Super fund on an after fees basis. Or HostPlus, or HESTA, or MyLifeMySuper, or any of the other high performers.

Or if they wanted a Balanced strategy, these higher performing funds average nearly 1.2%pa better than the media's preferred Active Super. (figures below)

This media attention all came about because of the inaugural "Name and Shame" list of 13 funds that have underperformed. This list prompted the natural question by the media - if the named 13 are the worst, which are the best?

The Fierce Performers Index is the top ten consistently performing funds based on net returns to investors after all fees and adjusted for risk.

The Fierce Performers Index is an index created by Super Fierce comprising the 10 most consistently high performing super funds over the past 15 years. The Index uses Balanced strategy returns, adjusted for administration fees, and adjusted for the differences in allocations that each fund makes to higher risk "Growth Assets". Then it compares each fund's returns across three very different investment periods during that 15 years (2005-2010, which included the GFC; 2010-2015, Australia's mining boom and global recovery from the GFC; and 2015-2020, where Australia's growth slowed but global equity markets took off, ending with the Pandemic), and the year-on-year standard deviation of returns.

The Fierce Performers Index is the average performance of the Balanced strategies of the 10 funds in the Index. Then there is a Fierce Performers Index series for other investment options common to several of the funds, such as High Growth.

The average of these funds' high growth strategies over the past 10 years was 10.62%pa, which includes several (eg Aware Super) with LifeCycle funds if that's what our 30 year old needs. That's more than 1.5%pa higher than the fund easily interpreted as the highest returning fund in YourSuper's comparison tool.

That all said, what is worth pointing out is that Active Super is one of the few managers with a serious commitment to genuinely Sustainable investment strategies. And it outperforms the average, which is another tick.

It all comes down to what you want from your super.

Past 10 years performance – Like-for-like comparison All returns are after all fees, including administration fees, applied using the average balance over the lifetime of the average working Australian today.

Balanced Funds High Risk Funds

Media's recommended fund 7.64%pa 9.06%pa

Fierce Performers Index 8.83%pa 10.62%pa