I am a member of an industry Super Fund and I was just going through it's last statements and magazine that they sent me. Generally their return for most of their different types of investments are quite reasonable and in line with the general market. However I did notice their cash options have very poor returns.
These are the returns for the last 12 Months to 31 December 2007.
Australian fixed interest---1.56%
Diversified Fixed Interest---3.92%
International Fixed Interest---4.84%
Currently I can get 7.3% for my at call account and 8.2% for a 1 year term deposit outside of super. After tax that gives me 5.5%. If you are will to buy floating rate notes or corporate bonds you can do much better than 5.5%.
My question is how is it that anyone off the street can make 5.5% net after tax by themselves but super funds with less taxes do so poorly? They do have management fees but they are very low and not of big consequence as the funds are non profit organizations. Am I missing something or am I better off by staying out of super? I am talking of the cash options only.