# Choosing a super fund



## katalyst (5 February 2008)

Hey,
      sorry if this is off topic. i have worked several different jobs and my employers have put my super into serval different funds. So im looking for a fund to rollover my money into. However I dont really not what to look for in a super fund. Could you guys tell me what to look for in a fund and whether you could recommend any funds. I'm looking for something geared towards growth.

thanks


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## auric (6 February 2008)

manage your own smsf


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## TheRage (6 February 2008)

SMSF are really only advantageous if Property is to be owned by the Super fund. There are plenty of Investor Managed Accounts, MLC MasterKey Custom that are not your usual unit Trust arrangement which allow the direct purchase of Australian equities. The advantage of these vehicles is that if you own a fully imputated share portfolio within the account, the effective Superannuation earnings tax will be rebated by the imputation from the shares becasue ASX listed companies are taxed at 30% and Superfunds at 15%. This means owning a fully imputated portfolio will effectively deliver a 15% rebate to the Superannuation account on top of the dividends.


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## Prospector (6 February 2008)

TheRage said:


> SMSF are really only advantageous if Property is to be owned by the Super fund.




Sorry, have to disagree with you there.  There are many advantages in having an SMSF and none of these relate to property.

SMSF allow you full control over your super funds, within the Trust deed, and many SMSF would not have enough money in them (until recently) to purchase property anyway.  The things I like about the SMSF is that if you invest the time, you reap the rewards without the management fees.  You take the risk but at least it is your risk, not others!

But an SMSF is not ideally suited where the funds are under a certain level, say $150K.  I would definately amalgamate all of the funds, and look for funds that dont charge excessive management fees; and also offer good Insurance plans to go with them.  Host Plus?  Superannuation Trust?  Kind of like member, or Employee funds within a certain industry as opposed to the funds that Insurance companies set up.


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## Bomba (6 February 2008)

- investment choice (variety, style, diversification)
- insurance arrangements (life, total disability, salary continuance
- estate planning (binding or non binding beneficiaries)
- MERs ( low cost usually equates to an industry fund, higher costs associated with retail funds)


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## katalyst (6 February 2008)

Thanks for your responses. Do retail funds offer better returns then industry funds, or does it depend on the fund?


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## Prospector (6 February 2008)

katalyst said:


> Thanks for your responses. Do retail funds offer better returns then industry funds, or does it depend on the fund?




I think Industry Funds have lower commissions, but perhaps a more conservative approach to investments.  Maybe check out an Industry fund that allows you to be more aggressive in its approach?  Many allow to to specify which type of approach you are interested in; or allocate part of the money to an aggressive area of investment.


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## doctorj (6 February 2008)

TheRage said:


> There are plenty of Investor Managed Accounts, MLC MasterKey Custom that are not your usual unit Trust arrangement which allow the direct purchase of Australian equities. The advantage of these vehicles is that if you own a fully imputated share portfolio within the account, the effective Superannuation earnings tax will be rebated by the imputation from the shares becasue ASX listed companies are taxed at 30% and Superfunds at 15%.



The fees on MKC's IDPS platform are bordering rediculous.  And you have to retain an adviser they've accredited to be eligible who will also want a cut.

IMHO there are many better options out there for anyone's who's not overwhelmingly wealthy.


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## r m (6 February 2008)

I suggest you start by looking at two magazines:

Smart Investor - more of an investment magazine with some good super information.
Money magazine - more of a general magazine but often has some useful tips.

At the back of these magazines there are tables relating to Superannuation options which will give you a starting point.

Also, once you have a bit of a shortlist, you could take a look at the agencies that rate superannuation plans.  The ones that come up in a quick search are:

www.superratings.com.au 
http://www.selectingsuper.com.au/index.html

I am sure there is at least one other organisation but I didn't come across it when I did a brief search.

Transferring super from one account to another is straightforward - fill in a form and return it.

Also, if you can't trace some of your former super there is the option to trace "lost" super.  I don't have details of this and haven't had to do it myself.  Try the ato website for this.
http://ato.gov.au/super/pathway.asp?pc=001/007/014/001&mfp=001&mnu=4456#001_007_014_001

It is worth the effort of amalgamating your super as it reduces the fees charged (one set of fees rather than paying fees for every account open).  The year on year compounding of these fees will make a difference.


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## Julia (6 February 2008)

TheRage said:


> SMSF are really only advantageous if Property is to be owned by the Super fund.




Really? Could you explain why?


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## TheRage (7 February 2008)

The cost as prospector mentioned is prohibitive for amounts generally below $250,000. Average SMSF costs $1,000 for compliance audit, $1,500 to set-up and most accountants have an ongoing cost built in around 1-5 K depending on complexity and work invovled. I believe propectors point relating to control is a valid one but there are non SMSF products available which allow the purchase and sale of shares without the structure being unitised like a normal industry super fund/ retail master fund. I will conceed that the larger the balance the cheaper they are just like a SMSF. Average cost on 500K is around 0.37% but as DR J mention above usually needs to be set-up through an adviser. However if you have a good adviser he won't slap an ongoing fee onto it rather charge on a fee for serive basis.

I think SMSF have their place and I use them often but for the average joe without big $$ in the tin they are not worthwhile. Another problem that I often see is that people who set-up self managed super funds with very little market experience end up blowing there whole life savings through trial and error. Control can be a good thing if you are a disciplined investor/ trader but for the most part I don't think people should be managing thier own Super unless they are completely physchologically removed from their investing/ trading decisions.


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## Julia (7 February 2008)

TheRage said:


> The cost as prospector mentioned is prohibitive for amounts generally below $250,000. Average SMSF costs $1,000 for compliance audit, $1,500 to set-up and most accountants have an ongoing cost built in around 1-5 K depending on complexity and work invovled. I believe propectors point relating to control is a valid one but there are non SMSF products available which allow the purchase and sale of shares without the structure being unitised like a normal industry super fund/ retail master fund. I will conceed that the larger the balance the cheaper they are just like a SMSF. Average cost on 500K is around 0.37% but as DR J mention above usually needs to be set-up through an adviser. However if you have a good adviser he won't slap an ongoing fee onto it rather charge on a fee for serive basis.
> 
> I think SMSF have their place and I use them often but for the average joe without big $$ in the tin they are not worthwhile. Another problem that I often see is that people who set-up self managed super funds with very little market experience end up blowing there whole life savings through trial and error. Control can be a good thing if you are a disciplined investor/ trader but for the most part I don't think people should be managing thier own Super unless they are completely physchologically removed from their investing/ trading decisions.



Thanks for that explanation, Rage.  I still don't see the connection to your suggestion that SMSF's are only appropriate if they relate to property.
I've had one for several years and it runs very successfully.  I've never owned property within the Fund except for some shares in property trusts.


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## Judd (7 February 2008)

We ran an SMSF but it got a little too much for this little black duck.  With the agreement of my more sensible better half, it was wound up and the funds placed with AGEST.  It does allow a selection of choice of premixed funds as well as allowing a member to sector specific funds such as select Australian Shares, International Shares (both hedged and unhedged), Listed Property, Fixed Interest and Cash.  So to some extent you can mix and match.

A google search will lead you to the fund which is now a public offer fund.  The calculator on the Management Expense Ratio gives a reasonable way of calculating the cost.

I'm not pushing it just stating that it, and many other funds, are there.  All depends on your preferred approach to superannuation.

However, be aware that as always, superannuation is subject to legislative risk (just look at all the changes which have happened over the last 15 or so years).  No reason to assume that there will not be further changes down track.


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## TheRage (7 February 2008)

Julia said:


> Thanks for that explanation, Rage.  I still don't see the connection to your suggestion that SMSF's are only appropriate if they relate to property.
> I've had one for several years and it runs very successfully.  I've never owned property within the Fund except for some shares in property trusts.





A SMSF can purchase property which can have several favourable consequences. For instance due to changes in borrowing rules for Superannuation the trustee can borrow money to purchase a property and then salary sacrifice to the fund paying down the property at an effective tax rate if the property is sold the capital gains payable are effectively 10%. People in general are more comfortable borrowing to invest in property than shares so this is a big advantage for SMSF over a normal Superannuation account or an investor managed account. Therefore if you feel that purchasing property could yield significant capital gain in the future a SMSF will allow you to gear up your portfolio. The obvious downside is that if your only asset is a property then you are very exposed to one asset class.


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## Buffettology (7 February 2008)

As super is by far my smallest form of investment, I only had a quick look at funds, but I looked at both fees and average returns.

I found First State Super and AGEST were two of the better performing funds with a low fee structure.

The website was called apple something?  Not sure, google "apple" and "super fund comparison" or something like that and you will be sure to find it.


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