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5 steps to finding the right super fund

Public super funds offer a wide range of investment options to choose from. But how do you find a fund that’s right for you?

1. Identify your risk profile


Your risk profile is based on two things - your investment timeframe and your appetite for risk.

The longer you have until retirement, the more time you have to ride the ups and downs of higher-growth investments, such as shares and property. But if you’re planning to retire soon, you may prefer the security of a more conservative investment with lower growth potential.


You also need to consider how much risk you’re comfortable with. In general, the higher the potential for growth, the greater the risk. Higher growth assets are more strongly affected by market volatility, and there is no guarantee you’ll receive the level of growth you expect.


At the same time, it’s important to balance risk against the need to generate a high enough return to deliver the retirement lifestyle you’re looking forward to. After all, the risk of running out of money in retirement is perhaps the biggest risk of all.


Your risk profile depends on your investment time frame and preferred level of risk. By identifying your risk profile, you can choose a fund with an appropriate asset mix, offering the ideal balance between risk and return. Our online risk profile calculator is a great place to start. You can also read more about different asset classes and their general risk and return expectations.


2. Consider long term performance

Super is a long-term investment, so it’s important to look for a fund with the discipline and consistency to generate strong returns over the longer term. While it can be tempting to choose a fund that’s at the top of the performance tables today, remember that past performance is no indication of future performance, with changing market conditions often producing different results in different years.

A better approach is to look at the fund’s investment philosophy and the quality of their investment process. A comparison site like Morningstar or Cannex can be a good place to start. Then, when you find a fund you’re interested in, read the Product Disclosure Statement to find out how your money will be invested.

If you do decide to look at past returns, use the longest period available – preferably five years or more. And be careful to compare like with like. After all, you can’t expect a defensive fund to produce the same returns as a higher risk alternative.

3. Check the investment options

Diversification across asset classes and sectors is usually a beneficial way to reduce risk and smooth returns over time.

You can either choose a balanced investment option, with built-in diversification, or do it yourself by selecting your own mix of different investment options. Remember, too, that you may want to update your asset mix as you grow older and your risk profile changes. To make that possible, it can be useful to choose a fund that allows you to switch easily between options without paying too much.


4. Find value for money


Management fees can make a big difference to your returns over time, so it’s important to find a fund that offers good value for money. But value is about more than just the amount you pay – it also depends on the service you receive in return.

Here are some of the other features you need to think about:

  • Financial strength. In an uncertain world, it can be worth paying a little more for the security of an established administrator with the financial strength to keep delivering over the long term.
  • Information and customer service. Naturally you’ll want access to up-to-date information on your investments, with the ability to talk to an expert about your fund and your investment options. You’ll also want a manager who responds rapidly to your requests – for example, processing new investments quickly at today’s unit price, not next week’s.
  • Insurance. Arranging insurance through your super fund can be a very cost-effective option, allowing you to harness the buying power of a fund with thousands of members, as well as paying for premiums out of pre-tax super savings, not after-tax income.

But insurance premiums vary widely between funds, often dwarfing other management fees. That means it’s worth doing the numbers and working out your overall cost before you invest.

5. Get the right advice

After your family home, your super is likely to be your biggest asset – so choosing a super fund could be one of the most important financial decisions you ever make. Remember to always read the fund’s Product Disclosure Statement before you invest.

If in doubt, seek advice from a qualified financial adviser. They’ll take the time to thoroughly understand your lifestyle goals and individual situation, then help you find a fund to match.

Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (Colonial First State) is the issuer of the FirstChoice range of super and pension products from the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557. Colonial First State also issues interests in products made available under FirstChoice Investments and FirstChoice Wholesale Investments. This document may include general advice but does not take into account your individual objectives, financial situation or needs. You should read the relevant Product Disclosure Statement (PDS) and Financial Services Guide (FSG) carefully, assess whether the information is appropriate for you, and consider talking to a financial adviser before making an investment decision. The PDS and FSG can be obtained from or by calling us on 13 13 36.