# Advice on good super fund please



## tothemax6 (26 October 2010)

Hi all,
I know this is probably a poor first post to this forum (this is a stock forum after all), but its an important question for me and if anyone would know the answer its probably people here . 
Specifically regarding super funds, it seems that they have an exceptionally poor return rate. I downloaded the excel sheet that the government did on super fund returns, and maybe 15-20% of the top 200 actually posted a positive profit over the 3 year period. I understand that there was a GFC, but plenty of people saw it coming, and ^80% of the fund managers apparently didn't.
Currently the fund I am with (Hesta) has the hilarious characteristic that cash gets a better return than the claimed 'high-risk, high-return' shares and private equity. I would rather move the money into a fund that knows what it is doing.
So are there any 'good' super funds which people here like and are comfortable with there money in?
Also, as I am fairly young and know little about super, does it have to be sent to a fund specifically calling itself 'super'? Could you, for instance, have the super money sent into an ETF, or some kind of special fund that (for a random example) invests only in bananas? Or even better, are there super-funds that simply track an index of some variety (so there is less management fee)?
Cheers!


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## So_Cynical (26 October 2010)

What ever fund you go into...its up to you to manage your money, the fund just invests it according to there options and your choices....so the challenge is for you to make timely and good investment option choices.

IMO Good funds have 4 characteristics.

Have at least 8 investment choices (including Aust shares Geared) 
Have a fast investment choice switch (online within 36 hours even better)
Have low fees.
Have a low investment choice switching fee/cost.

The rest is irrelevant.


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## Julia (26 October 2010)

If you have enough Super to make it worthwhile, you could set up your own self managed super fund and eliminate all those pesky commissions and woeful management that frequently fails to beat the index.


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## tothemax6 (27 October 2010)

Yeah self-managed isn't really for me since the current sum is minor, and I don't intend to actively manage my super funds. This is more for setting up my super and then forgetting about it to some extent, and being satisfied that the money is not just being siphoned away.


> IMO Good funds have 4 characteristics.
> * Have at least 8 investment choices (including Aust shares Geared)
> * Have a fast investment choice switch (online within 36 hours even better)
> * Have low fees.
> ...



Hmm OK cheers for that. Yeah I was wondering if there were super funds which offered leveraged options. Regarding switching between options, why would this be a good idea? Is there really an advantage in swapping between options from time to time? I know that it would have been a good idea, if one had been knowledgeable about economics and spotted the sub-prime crash, but such events are very rare...


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## DB008 (27 October 2010)

Julia said:


> If you have enough Super to make it worthwhile, you could set up your own self managed super fund and eliminate all those pesky commissions and woeful management that frequently fails to beat the index.




Question to Julia,

I trade my own super via a SMSF 
Have just started a new job 
The employers say that l have to use their super fund. 
Isn't this illegal as l have a choice now to use whoever l want???

I thought that the law changed and l could choose whoever l wanted for my super. If l go with the one that they are using, then l will get slugged "exit fees" and god knows what else.


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## So_Cynical (27 October 2010)

tothemax6 said:


> Yeah self-managed isn't really for me since the current sum is minor, and I don't intend to actively manage my super funds. This is more for setting up my super and then forgetting about it to some extent, and being satisfied that the money is not just being siphoned away.




Ok so you want low costs/fees...but want to set and forget  set and forget during the GFC (Jan 08 to April 09) meant that 20 to 40% of your super money disappeared...unless of course you were all in cash, then your return was prob around 3% PA but you would of totally missed the recovery and the 15 to 20% gains.....see what a hands off approach gets you.



tothemax6 said:


> I was wondering if there were super funds which offered leveraged options. Regarding switching between options, why would this be a good idea? Is there really an advantage in swapping between options from time to time? I know that it would have been a good idea, if one had been knowledgeable about economics and spotted the sub-prime crash, but such events are very rare...




There's a few funds/managers that have geared options most don't, switching between investment options at the right time means your in cash for the worst of the GFC and in the market for the run up to the GFC and back in near bottom....personally i switched 1 of my funds to 100% Aust shares in March 09 so caught the bottom.  got the 18% return then switched out half that in Jan 2010.



tothemax6 said:


> if one had been knowledgeable about economics and spotted the sub-prime crash, but such events are very rare




Its pretty much a certainty that the Chinese miracle will falter at some point in time, when that happens our market will fall...worst case scenario (Chinese civil war) our market will fall 50 to 70% when that happens you really really want to be in your funds cash option.


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## gordon2007 (27 October 2010)

So_Cynical said:


> Its pretty much a certainty that the Chinese miracle will falter at some point in time, ...worst case scenario (Chinese civil war)



Very powerful statement. Also feel very true. Perhaps a whole new thread though for another time.


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## pedalofogus (27 October 2010)

DB008 said:


> Question to Julia,
> 
> I trade my own super via a SMSF
> Have just started a new job
> ...




correct. Super choice has been around now for years, and it requires your employer to let you choose where your super goes. However, if you don't give them the choice form, then they can put it into their default fund. So make sure you have done that form.

Pedalofogus


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## gooner (27 October 2010)

pedalofogus said:


> correct. Super choice has been around now for years, and it requires your employer to let you choose where your super goes. However, if you don't give them the choice form, then they can put it into their default fund. So make sure you have done that form.
> 
> Pedalofogus




There are exceptions such as under certain federal awards where choice is not offered - you should ask your employer why choice is not available


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## Julia (27 October 2010)

DB008 said:


> Question to Julia,
> 
> I trade my own super via a SMSF
> Have just started a new job
> ...



Already answered by others, Danny.  To be honest, it's not something I would have known anyway, having not been employed when I set up my SMSF.



So_Cynical said:


> Ok so you want low costs/fees...but want to set and forget  set and forget during the GFC (Jan 08 to April 09) meant that 20 to 40% of your super money disappeared...unless of course you were all in cash, then your return was prob around 3% PA but you would of totally missed the recovery and the 15 to 20% gains.....see what a hands off approach gets you.



Or even less.  A friend of mine switched to cash at a good time, but only later found that her funds were only earning 1% in the cash option!!



> There's a few funds/managers that have geared options most don't,



I don't know how this is applied in public SF's but in a SMSF you may or may not be able to borrow depending on the wording in the Trust Deed.  I'd imagine public SF's are similar.



> switching between investment options at the right time means you're in cash for the worst of the GFC and in the market for the run up to the GFC and back in near bottom....personally i switched 1 of my funds to 100% Aust shares in March 09 so caught the bottom.  got the 18% return then switched out half that in Jan 2010.
> 
> Its pretty much a certainty that the Chinese miracle will falter at some point in time, when that happens our market will fall...worst case scenario (Chinese civil war) our market will fall 50 to 70% when that happens you really really want to be in your funds cash option.



I don't think you can expect any Fund Manager (on their past record anyway) to be up to switching your funds between shares and cash.  (Various reasons for this discussed elsewhere).
So you are going to have to be on top of market movements yourself, and give your SF the necessary instructions for every switch.

Really good post, So Cynical


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## tothemax6 (28 October 2010)

> Ok so you want low costs/fees...but want to set and forget set and forget during the GFC (Jan 08 to April 09) meant that 20 to 40% of your super money disappeared...unless of course you were all in cash, then your return was prob around 3% PA but you would of totally missed the recovery and the 15 to 20% gains.....see what a hands off approach gets you.



Mate, I think that's a highly biased interpretation of my post, given that you acknowledged my statement that which specifically included the GFC as a reason why you WOULD do option swapping. As I said, do you really end up swapping that much, other than say once a year when big changes are set to happen? If so I am interested in doing a bit this.


> There's a few funds/managers that have geared options most don't, switching between investment options at the right time means your in cash for the worst of the GFC and in the market for the run up to the GFC and back in near bottom....personally i switched 1 of my funds to 100% Aust shares in March 09 so caught the bottom. got the 18% return then switched out half that in Jan 2010.



Awesome working the market dude, I aspire to your foresight . But why do you have more than one fund?


> Its pretty much a certainty that the Chinese miracle will falter at some point in time, when that happens our market will fall...worst case scenario (Chinese civil war) our market will fall 50 to 70% when that happens you really really want to be in your funds cash option.



Well judging from the recent statements of Wen Jiabao, China is still heading the direction of democracy (which is good news, hopefully eventually they will ditch their currency manipulation too). And when a Chinese recession hits, my money will probably go straight into metal rather than cash.  Which brings me back to my earlier question, are there super funds which offer specific investments rather than 'stocks'? (like say, Aussie farm stocks?).


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## yogiebear (23 November 2010)

Julia said:


> If you have enough Super to make it worthwhile, you could set up your own self managed super fund and eliminate all those pesky commissions and woeful management that frequently fails to beat the index.




Or you could use a normal superfund that offers the ability to invest in direct shares and cash. There are no commissions, extremely low fees and no hassles with running it yourself. 

The disadvantages obviously are no property, and the shares need to be in the top 200.

If you can't choose your superfund, is there anything stopping you from once a year partially rolling your super benefit to your chosen fund?


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## thestevo888 (23 November 2010)

I'm also interested in the SMSF side of things, but have limited cash ($28k) to begin with. So, three questions for you wise heads...

1. Can you use your smsf to invest in any shares you like? (The whole reason I'm interested in smsf is that, in a few months of investing, I'm up 100% on some of my picks, vs about 3-4% in super during same time frame. But I would want to stay away from top 200 companies, in order to chase bigger % gains)

2. How much time and effort are involved in setup, and could anybody recommend a good book on the subject?

3. Is my paltry superfund balance laughably inadequate to begin a smsf? I've heard varying recommendations, ranging from 60-200k to start (I have mates who are accountants, so will have reduced/no fees for auditing, etc)

Thanks for your input, guys - your advice, as always, is much appreciated.


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## So_Cynical (23 November 2010)

yogiebear said:


> Or you could use a normal superfund that offers the ability to invest in direct shares and cash. There are no commissions, extremely low fees and no hassles with running it yourself.




I don't believe it but am willing to suspend my disbelief  so please Yogie what is this superfund you speak of that allows direct share investment?


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## Tatts (24 November 2010)

So_Cynical said:


> I don't believe it but am willing to suspend my disbelief  so please Yogie what is this superfund you speak of that allows direct share investment?




Australian Super sort of allows you to. 
You can invest in the asx 200 with some conditions:
- Must have a minimum balance of $10k
- Can only have up to 50% of your balance invested in this option
- Can't have more than 20% in any one stock

Plus you are charged $39 per annum on top of standard fees.
http://www.australiansuper.com/investments_asx-200-shares-investments.aspx


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## So_Cynical (24 November 2010)

Tatts said:


> Australian Super sort of allows you to.
> You can invest in the asx 200 with some conditions:
> - Must have a minimum balance of $10k
> - Can only have up to 50% of your balance invested in this option
> ...




WOW that's pretty cool...and the brokerage is cheap, is the $39 annual fee per share?

My opinion of Australian super just went up several notches.


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## Jako (25 November 2010)

Spectrum Super ( sub of IOOF, I think) also allow you to invest directly into equities, also with some  conditions.

Only 80% of your super can be in stocks
minimum of $3000 in a partcular stock
brokerage the same as above
a couple of others I cant think of right now.

you can even trade online, with real time switching.

About 150 or so stocks available ( at a guess) not all ASX200.

Sort of halfway between a normal fund & SMSF

cheers


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## Naked shorts (25 November 2010)

"Good super-fund" is an oxymoron.


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## Junior (25 November 2010)

thestevo888 said:


> I'm also interested in the SMSF side of things, but have limited cash ($28k) to begin with. So, three questions for you wise heads...
> 
> 1. Can you use your smsf to invest in any shares you like? (The whole reason I'm interested in smsf is that, in a few months of investing, I'm up 100% on some of my picks, vs about 3-4% in super during same time frame. But I would want to stay away from top 200 companies, in order to chase bigger % gains)
> 
> ...




1)  Yes.  Once your SMSF has been set up, with a trust deed etc.  you simply establish a bank account in the name of the Fund, and then buy/sell investments like you would outside of super.  As long as you are within the parameters set out by your fund's investment strategy.

2 and 3)
CCH Guide to Self Managed Super Funds by Grant Abbott is a pretty comprehensive guide.

It is generally accepted that you need $150-200k to make it worthwhile.  However if you have access to cheap/free accounting, it becomes feasible with less.

There is quite a heavy compliance burden assocaited with SMSFs.  You need a trust deed to be written up, and then ongoing costs include auditors fees and accounting fees.  

Personally I'd say it really isn't worth the hassle with $28k.  If you're that successful with your trading you should be able to build significant wealth outside of super.


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## pma99 (26 November 2010)

thestevo888 said:


> I'm also interested in the SMSF side of things, but have limited cash ($28k) to begin with. So, three questions for you wise heads...
> 
> 1. Can you use your smsf to invest in any shares you like? (The whole reason I'm interested in smsf is that, in a few months of investing, I'm up 100% on some of my picks, vs about 3-4% in super during same time frame. But I would want to stay away from top 200 companies, in order to chase bigger % gains)
> 
> ...



I currently have a SMSF and am in the process of changing to esuperfund. It might be worth your while having a look:

http://www.esuperfund.com.au/

There is also another thread on ASF that includes varied experiences with esuperfund:

https://www.aussiestockforums.com/forums/showthread.php?t=7558

Don't take this as a recommendation, just a suggestion for a source of additional information.

Cheers

Paul


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