2019 Fat Cat Funds Report, Investing

Best performing super funds in Australia

We compare the best performing super funds in Australia in 2019 – and the worst.

This is the seventh year Stockspot has researched Australia’s largest super funds for our annual Fat Cat Funds Report.

In this year’s research we compared 600 multi-asset investment options offered by Australia’s largest 100 super funds to find the best super funds – and the worst. The funds were assessed on how they performed, after fees, compared to other super options of similar risk over 5 years.


Fat Cat Funds Report: Fit Cat Funds and Fat Cat Funds

Top performing super funds

In 2019 QSuper took out the Gold Fit Cat Fund award for the most top performing funds over 5 years. QSuper manages over $100b of Australian’s superannuation investments, and takes out this years Gold Fit Cat Fund award with 9 Fit Cat Funds. 

The Silver award goes to UniSuper, who took the top spot last year. 

The Bronze award goes to Australia’s largest superannuation fund, AustralianSuper, who manages more than $160 billion for 2.2 million members. AustralianSuper had 4 Fit Cat Funds. 

Despite having different investment strategies, the one factor these 3 funds all had in common was investment fees of well under 1%. Every Fit Cat Fund had fees of less than 1% with an average fee of 0.76%

Fit Cat Funds: QSuper, UniSuper and Australian Super
QSuper
QSuper – Aggressive
QSuper – Lifetime Aspire 1
QSuper – Lifetime Outlook
QSuper – Balanced
QSuper – Lifetime Aspire 2
QSuper – Lifetime Focus 1
QSuper – Lifetime Focus 2
QSuper – Lifetime Focus 3
QSuper – Lifetime Sustain 1
Unisuper
Unisuper – High Growth
Unisuper – Sustainable High Growth
Unisuper – Balanced
Unisuper – Sustainable Balanced
Unisuper – Conservative Balanced
Australian Super
Australian Super – High Growth
Australian Super – Balanced
Australian Super – Conservative Balanced
Australian Super – Stable

Worst performing super funds

The usual subjects have once again made the list of Fat Cat Funds.

ANZ/OnePath has come out ahead as the number one Fat Cat Fund with 11 Fat Cat Funds or 27% of the worst funds (up from 25% last year). ANZ have now topped our list for the seventh time.

Rather than refund or reduce the fees on these products ANZ recently sold these funds to IOOF. We can only hope IOOF lowers its fees when it takes over these funds.

AMP shares the Fat Cat Fund gong with 11 Fat Cat Funds. AMP’s share price has fallen by 65% since we published the first Fat Cat Fund Report in 2013 and billions has been withdrawn from underperforming AMP products. Many AMP super products continue to do poorly for members.

Perpetual takes out the Silver award for the 2nd year in a row with 4 Fat Cat Funds. There’s a two way tie for the Bronze Award with both MLC and Zurich having 3 Fat Cat Funds each. 

Fat Cat Funds: Anz/OnePath, AMP, Perpetual, MLC and Zurich

OnePath/ANZ
OnePath Masterfund – OnePath Select Leaders
OnePath Masterfund – OptiMix Balanced
OnePath Masterfund – OnePath Managed Growth
OnePath Masterfund – OnePath Active Growth
OnePath Masterfund – OptiMix Growth
OnePath Masterfund – OnePath High Growth
OnePath Masterfund – OnePath Balanced
OnePath Masterfund – OnePath Tax Effective Income
OnePath Masterfund – OptiMix Moderate
OnePath Masterfund – OptiMix Conservative
AMP
AMP Superannuation Savings Trust – AMP Super Directions – Growth
AMP Superannuation Savings Trust – FLS – BlackRock Global Allocation
AMP Superannuation Savings Trust – FLS – AMP Capital Multi-Asset
AMP Superannuation Savings Trust – FLS – Future Directions Moderately Conservative
AMP Superannuation Savings Trust – AMP Super Directions – Diversified Balanced
AMP Superannuation Savings Trust – FLS – AMP Capital Dynamic Markets
AMP Superannuation Savings Trust – FLS – ipac Income Generator
AMP Superannuation Savings Trust – FLS – AMP Lifecycle Active Capital Stable
AMP Superannuation Savings Trust – FLS – Schroder Real Return
AMP Superannuation Savings Trust – FLS – Responsible Investment Leaders Conservative
AMP Superannuation Savings Trust – FLS – Future Directions Conservative
Perpetual
Perpetual WealthFocus Superannuation Fund – Perpetual Diversified Growth
Perpetual WealthFocus Superannuation Fund – Perpetual Balanced Growth
Perpetual WealthFocus Superannuation Fund – Perpetual Conservative Growth
Perpetual’s Select Superannuation Fund – Diversified Fund
Zurich
Zurich Master Superannuation Fund – Zurich Managed Growth 
Zurich Master Superannuation Fund – Zurich Balanced 
Zurich Master Superannuation Fund – Zurich Capital Stable 
MLC
MLC Super Fund – Business Super – MLC Inflation Plus – Assertive Portfolio
MLC Super Fund – Business Super – MLC Inflation Plus – Moderate Portfolio
MLC Super Fund – MLC Inflation Plus – Conservative Portfolio

How does Stockspot compare?

Low cost indexing continues to be the best way for Australians to get the most out of their super. Stockspot’s indexed investment portfolios ranked in the top 11% of all super options in Australia after accounting for investment fees and accumulation stage super taxes.

The lower risk (moderate) Stockspot portfolios we offer were in the top 1% of super options. While Stockspot is only available to SMSFs, many super funds offer similar indexed super options with low fees and consistent performance.

Millions of working Australians in default super funds would benefit greatly if all their super money went into a low-cost index fund, rather than paying the large salaries of people in the funds management industry.


Average super fund 5 year return (p.a.)Stockspot 5 year return after fees and taxes (p.a)Stockspot performance
Growth7.0%8.6% (Topaz)Top 8%
Balanced5.6%7.6% (Emerald)
7.2% (Turquoise)
Top 7%
Top 11%
Moderate4.5%6.8% (Sapphire)
6.3% (Amethyst)
Top 1%
Top 1%

Best performing aggressive growth super funds

The top performing growth funds had very little in defensive assets such as bonds and cash. This helped them achieve returns of 10-11% p.a. over five years, as growth assets have enjoyed strong returns in recent years. However, the equivalent Vanguard index fund still beat 85% of high growth funds over the past five years.


Average fee (p.a.)Average 5 year return (p.a.)
Top 101.1%10.3%
Bottom 102.6%5.5%
Comparative Index %
Vanguard High Growth Fund after investment fees and accumulation super taxes (No Stockspot comparison available)9.7%
% of aggressive growth super funds that were beaten by Vanguard85%

The bottom funds typically had more (10%) cash and bonds and higher fees. The average fee was 2.6% which dragged performance down to 3.5-6.6% p.a.

OnePath featured heavily in the Fat Cat Fund list with six of the worst 10 performing funds. Meanwhile we saw industry funds (e.g. UniSuper, AustralianSuper, and Hostplus) take out the top 10 performing super funds.





Top 10 (Fit Cat Funds)5 year return (p.a.)Bottom 10 (Fat Cat Funds)5 year return (p.a.)
1. Unisuper – High Growth10.9%OnePath Masterfund – OnePath Select Leaders3.5%
2.Unisuper – Sustainable High Growth10.7%OnePath Masterfund – OptiMix Balanced4.7%
3.Club Plus Superannuation Scheme – High Growth10.5%OnePath Masterfund – OnePath Managed Growth4.8%
4.Statewide Superannuation Trust – High Growth10.4%OnePath Masterfund – OnePath Active Growth5.0%
5.Australian Super – High Growth10.2%OnePath Masterfund – OptiMix Growth5.5%
6.Equipsuper – Growth Plus10.2%Maritime Super – Moderate6.0%
7.Construction & Building Unions Superannuation (CBUS) – High Growth10.2%AMP Superannuation Savings Trust – AMP Super Directions – Growth6.2%
8.HOSTPLUS Superannuation Fund – Shares Plus10.1%MLC Super Fund – Business Super – MLC Inflation Plus – Assertive Portfolio6.3%
9.NGS Super – Share Plus10.1%OnePath Masterfund – OnePath High Growth6.5%
10.Prime Super – Managed Growth10.1%Maritime Super – Growth MVP6.6%

Best performing growth super funds

The top performing funds in this group had a relatively small (25%) allocation to bonds and cash. This allowed them to return 8-11% p.a. over five years, the higher allocation to growth investments helped them to enjoy a strong few years of returns. A simple index fund beat 9 out of 10 growth funds over the past five years.


Average Fee (p.a.) Average 5 Year Return (p.a.)
Top 101%9.4%
Bottom 102.4%4.6%
Comparative Index %
Stockspot return after investment fees and accumulation super taxes8.6%
Growth super funds that were beaten by Stockspot92%

The bottom funds in this group typically had a higher (33%) allocation to cash and bonds and high fees of 2.4% on average. This pulled down their performance to 3-6% p.a.

OnePath and AMP once again featured heavily in this Fat Cat Fund list, both with four worst performing funds each. Public Sector and Industry funds such as QSuper, UniSuper, HESTA and Australian Super dominated the category taking out majority of the top 10 super funds.





Top 10 (Fit Cat Funds)5 year return (p.a.)Bottom 10 (Fat Cat Funds)5 year return (p.a.)
1. Health Employees Superannuation Trust Australia (HESTA) – Eco Pool10.8%AMP Superannuation Savings Trust – BlackRock Global Allocation3.4%
2.QSuper – Aggressive9.7%AMP Superannuation Savings Trust – AMP Capital Multi-Asset3.6%
3.QSuper – Lifetime Aspire 19.5%OnePath Masterfund – OnePath Balanced4.0%
4.Australian Super – Balanced9.5%OnePath Masterfund – OnePath Tax Effective Income4.5%
5.QSuper – Lifetime Outlook9.4%OnePath Masterfund – OptiMix Moderate4.6%
6.Unisuper – Balanced9.4%Perpetual WealthFocus Superannuation Fund – Perpetual Diversified Growth4.7%
7.MTAA Superannuation Fund – My AutoSuper (Balanced)9.0%AMP Superannuation Savings Trust – Future Directions Moderately Conservative5.0%
8.Unisuper – Sustainable Balanced8.9%AMP Superannuation Savings Trust – AMP Super Directions – Diversified Balanced5.4%
9.QSuper – Balanced8.8%Perpetual WealthFocus Superannuation Fund – Perpetual Balanced Growth5.5%
10.Statewide Superannuation Trust – Active Balanced8.7%Zurich Master Superannuation Fund – Zurich Managed Growth5.6%


‘Ethical’ super funds have a good 5 years

‘Ethical’ investment options within took out the number 1 options for both aggressive and growth profiles. We also saw many other sustainable options featuring in the Fit Cat funds this year.

Sustainable investments (also known as SRI or ethical investing) commonly exclude companies that are involved in fossil fuel activity, controversial weapons, and tobacco.

We recently investigated why ethical funds have performed well recently and whether it’s due to their ethical screens, or simply because of sector performance.

Best performing balanced super funds

The top performers in this group had a 45% allocation to fixed income and cash. This helped them achieve returns of 7-9% p.a. over five years. A simple index fund beat an extraordinary 9 of every 10 balanced funds over the past five years.


Average Fee (p.a.) Average 5 Year Return (p.a.)
Top 100.8%7.7%
Bottom 101.8%3.9%
Comparative Index
Stockspot return after investment fees and accumulation super taxes7.2%
Balanced super funds that were beaten by Stockspot 90%


Industry and public sector funds made up 7 out of 10 Fit Cat Funds. 

Large retail funds from AMP, OnePath and Perpetual dominated the Fat Cat Funds with 9 out of 10 funds being a retail fund. The common theme is these funds charge higher than average fees.

The bottom performing funds in this group typically had a higher 53% allocation to cash and bonds and higher fees. This has dragged down their performance to 3-5% p.a.

Funds who fit into this group go by many names: balanced, conservative balanced, conservative growth, moderately conservative and moderate. People need to be careful to understand the asset mix of their fund, not rely on how it has been named.





Top 10 (Fit Cat Funds)5 Yr Return (p.a.)Bottom 10 (Fat Cat Funds)5 Yr Return (p.a.)
1. QSuper – Lifetime Aspire 28.8%AMP Superannuation Savings Trust – AMP Capital Dynamic Markets2.9%
2.QSuper – Lifetime Focus 18.4%OnePath Masterfund – OptiMix Conservative2.9%
3.WA Local Government Superannuation Plan – Sustainable Future8.2%OnePath Masterfund – OnePath Conservative3.1%
4.QSuper – Lifetime Focus 27.8%Perpetual WealthFocus Superannuation Fund – Perpetual Conservative Growth3.8%
5.Australian Super – Conservative Balanced7.8%MLC Super Fund – Business Super – MLC Inflation Plus – Moderate Portfolio4.1%
6.Unisuper – Conservative Balanced7.5%Zurich Master Superannuation Fund – Zurich Balanced4.3%
7.AMG Super – AMG Balanced7.3%Perpetual’s Select Superannuation Fund – Diversified4.4%
8.IOOF Portfolio Service Superannuation Fund – IOOF MultiMix Moderate7.2%IAG & NRMA Superannuation Plan – Conservative4.4%
9.QSuper – Lifetime Focus 37.2%AMP Superannuation Savings Trust – ipac Income Generator4.6%
10.The Bendigo Superannuation Plan – Bendigo Balanced Index7.0%AMP Superannuation Savings Trust – AMP Lifecycle Active Capital Stable4.7%

Best performing moderate super funds

The top performing funds in this group had a 64% allocation to bonds and cash. This helped them achieve returns of 5-7% p.a. over five years.


Average Fee (p.a.)Average 5 Year Return (p.a.)
Top 100.8%5.8%
Bottom 101.5%3.3%
Comparative Index %
Stockspot return after investment fees and accumulation super taxes6.8%
Moderate super funds that were beaten by Stockspot100%

Industry and public sector funds made up 7 of the 10 Fit Cat Funds.

The bottom performing funds in this group typically had a higher 69% allocation to cash and bonds as well as higher fees. This reduced their performance to 3-4% p.a.

The more conservative the portfolio, the harder it is to beat index fund portfolio. Older Australians and pensioners in lower risk super strategies need to be even more sensitive to fees.





Top 10 (Fit Cat Funds)5 Yr Return (p.a.)Bottom 10 (Fat Cat Funds)5 Yr Return (p.a.)
1. Australian Super – Stable6.4%AMP Superannuation Savings Trust – Schroder Real Return2.6%
2.Prime Super – Conservative6.3%Zurich Master Superannuation Fund – Zurich Capital Stable 3.1%
3.AMG Super – AMG Capital Stable5.7%MLC Super Fund – MLC Inflation Plus – Conservative Portfolio3.1%
4.Unisuper – Conservative5.7%AMP Superannuation Savings Trust – Responsible Investment Leaders Conservative3.1%
5.Construction & Building Unions Superannuation (CBUS) – Conservative5.7%BT Super For Life – Retirement Wrap – Conservative Fund3.4%
6.IOOF Portfolio Service Superannuation Fund – IOOF MultiMix Conservative5.7%BT Super For Life – Retirement Wrap – 1940s Lifestage Fund3.5%
7.QSuper – Lifetime Sustain 15.6%AMP Superannuation Savings Trust – Future Directions Conservative3.5%
8.The Bendigo Superannuation Plan – Bendigo Conservative Index5.6%StatePlus Retirement Fund – Capital Stable3.6%
9.MTAA Superannuation Fund – Conservative5.5%Macquarie – Superannuation and Rollover – Capital Stable3.6%
10.AON Master Trust – Moderate – Index5.5%The Bendigo Superannuation Plan – Bendigo Defensive Wholesale3.8%

Industry vs retail super fund performance

Industry funds (and public sector funds) continue to do better than retail funds. The reason for this is due to:

  • Lower fees – industry funds have 30% lower fees than the average retail fund. Not having a profit motive means they are not profit driven, but that doesn’t mean that they are all “low cost”. 
  • Asset allocation – industry funds tend to have a higher allocation to unlisted assets such as property, infrastructure and private equity which have enjoyed strong recent returns.


Both Stockspot and the Vanguard Index Fund options have beaten the average Industry fund and approximately 90% of funds in total after fees and taxes. This is largely due to the compounding effect of lower fees.

Superannuation managers can easily access low cost index funds, yet many choose not to. We believe this is because there are still huge conflicts of interest in the industry.

Super funds would rather pay themselves – their big teams of fund managers, analysts and asset consultants – despite the evidence that they do not add any value to super fund investment returns.

Is bigger always better?

We find that super funds members don’t always enjoy benefits by joining larger funds. In many cases there are diseconomies of scale as funds grow. This is because of the cost of legacy administration systems and active investing.

There are more Fat Cat Funds than Fit Cat Funds between $20 billion and $100 billion in size. The best performing funds tend to either be between $5 and $10 billion or over $100 billion in size.


Our methodology

Our super fund ratings differ from others in two ways:

  • Most ratings businesses are paid by the funds who they rate. This creates a conflict of interest and means they only show the top funds. Stockspot doesn’t get paid by the funds we rate which means we can show the top and bottom performers without any bias. 
  • We compare apples for apples. Many ratings don’t question the asset allocations (growth and defensive assets) reported by the funds. There’s no verification of the actual risk of the defensive assets reported by funds. It allows super funds to ‘game’ the ratings system by mis-categorising growth assets as defensive assets to move up the comparison tables. We classify bonds and cash as defensive assets.

We developed the Fat Cat Fund ratings to help consumers compare super funds, to find funds that have consistently done well and avoid funds with a track record of consistently delivering poor returns.

Stockspot’s Fat Cat Fund ratings are based exclusively on data relating to a fund’s investment mix and published returns. 

What is a ‘Fit Cat Fund’ and ‘Fat Cat Fund’?

A super fund investment option is classified as a ‘Fit Cat Fund’ if they were in the top 10 performing funds in the appropriate risk group over 5 years.

A super fund investment option is classified as a ‘Fat Cat Fund’ if they were in the bottom 10 performing funds in the appropriate risk group over 5 years.

Our Universe and Benchmarks

We’ve analysed Australian superannuation funds across the four largest ‘multi-asset’ categories which include the major default funds and account for most of Australia’s superannuation pool.

  • We only consider funds that have up-to-date data on performance and fees available and have existed for at least five years.
  • Fund performance data is as at 30 June 2019.
  • Funds are categorised using their underlying asset allocation, with the grouping of mixed asset funds based on how much of the fund’s portfolio is invested in defensive assets.
  • We have compared funds with similar levels of defensive assets (cash and bonds). We do not use funds’ own classification of defensive assets because these often include property, infrastructure and defensive ‘alternatives’ which we do not consider to be defensive.

Fund categoryPercentage of cash and bonds
High growth 0-20%
Growth20.1-40%
Balanced40.1-60%
Moderate60.1-80%

Why have we chosen five years?

You need to see how a fund has done over a full market cycle (typically 10 years) to have a high level of confidence around how it performs in good and bad times.

Since many of the default MySuper options don’t have 10 years of history yet we’ve considered performance over five 5 years for this report so more funds could be included. 

It’s worth noting that some of the funds that who have performed well over five years have done so due to having a higher allocation to a particular asset, for example global shares. 

Assets go through cycles so just because one asset has done over the last five years doesn’t mean it will continue to go well over the next five years.

For this reason we suggest fund members don’t put too much emphasis on past performance and instead focus on the two factors that have the best predictive power which are risk (allocation to bonds and cash) and fees.

Find out how Stockspot makes it easy to grow your wealth and invest in your future.


Investment Associate

Marc has over 5 years experience in the financials services industry having previously worked for Morgan Stanley, AMP and KPMG. He holds a Bachelor of Business (Finance/Accounting) from the University of Technology Sydney (UTS), and has completed his Chartered Financial Analyst (CFA) Level 1.

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