ABC journalist Nassim Khadem is working on a news story on high superannuation fees. She’s looking to interview people who’ve been paying high super fees (it’s fine if you have now switched funds). She says:
“Australians are charged $30 billion year in super fees. Are you one of the people hit with crazy high fees? Are you willing to talk to ABC News on camera about it? If yes, please get in touch: khadem.nassim@abc.net.au” https://twitter.com/NassimKhadem/status/1399942877355003905
You might be paying too much if your fees are over 1% per year, or if your balance is going down or is much lower than you expected.
That is usually where the general analysis stops. We have some retail funds with roughly 1.5% annual fees and a government fund with only an $84 p.a. admin fee; buy-sell spreads are similar between them.
Both started within months of each other and have >decade long track records, the retail fund, admittedly a bit more aggressive (as well as having wider choices of investments that we picked to make the ‘basket’) has bettered the well regarded government ‘balanced’ fund by ~10% after fees.
For the average punter who is not happy to pay attention or participate in their investments, low fees may make the difference, but even some low fee funds are clinkers.
What is most important is growth and how it handles market shocks (ie the GFC and COVID). In each case the bigger hit the ‘expensive’ retails funds took was not as comparatively worse as was expected, and recovered in << 2 years and continued to pull away smartly.
I acknowledge that each person has their own risk profile and financial acumen, but I also think there is a certain disservice focusing only on fees rather than also referencing total return after fees as important criteria.
Thanks Phil, that’s a really great point! Fees need to be considered alongside other factors like growth, insurance offerings, ethical values (if this is a concern). It’s not a black and white issue, but high fees are still a red flag that it might be time to find a new fund. People should always do their research first though.
