Sequel to my previous forum post on SMSF.
Thank you to everyone that chimed in my previous post on SMSFs. A lot of very good advice there.
After running numbers with all variables I am seriously considering switching to Hostplus instead of creating a SMSF. A lot of the advice seemed to lean that way.
Hostplus appears to have the lowest administration and investment fees for the investments I am looking at.
Are there ozbargainers with Hostplus than can give a review/comment/experience/tips on their satisfaction with fund.
Thank you in advance.
Industry superannuation fund Hostplus has handed down one of the worst annual returns in the sector for its default product, but says it is “very comfortable” with its performance and its long-term investment plan remains on track.
The fund’s MySuper balanced option grew by just 7.6 per cent for the 2023–24 financial year. Rivals clocked returns in the double digits as global technology stocks fuelled soaring equity prices.
The median balanced super fund, which is generally a MySuper product nominated by a fund as a default product for new customers, returned about 8.8 per cent, according to SuperRatings.
Over the same period, the S&P/ASX 200 returned 7.8 per cent and the S&P 500 returned 22.7 per cent.
But Hostplus chief investment officer Sam Sicilia said the fact his fund’s MySuper returns fell short of these figures was not the result of taking a bad short-term bet on the markets, as other funds falling below the median return have claimed.
Instead, he said, it reflected Hostplus’ commitment to its investment strategy to drive returns over 10 and 20 years given its young customer base and the long-term nature of superannuation.
“This isn’t ‘we thought it was going to crash and we went defensive’ – we just continued with our long-term plan,” he said.
“We’re highly diversified across all asset classes, both listed and unlisted. That’s what we’ve been doing for 20 years, and it’s what we did last year. It’s just that last year was all about listed markets [for returns].
“But I’m very comfortable with our outcome.”
AustralianSuper also delivered lower returns than rivals for its default option in the last financial year at 8.5 per cent. However, chief investment officer Mark Delaney said the fund was too defensive around Christmas and missed out on much of the tech rally as a result.
Cbus also fell below the pack with a return of 8.4 per cent. CIO Brett Chatfield blamed its heavy exposure to unlisted property for the fund’s overall returns.
Long-term focus
The average age of Hostplus’ 1.8 million members is 37, compared with 50-plus at some other funds.
Mr Sicilia pointed out the fund’s commitment to maintaining diversification also meant its default option was one of the top performers during the pandemic, when plummeting sharemarkets sent most funds into the red for returns.
It returned an average of 8.3 per cent a year for the decade to June 30, 2024, and 7.9 per cent a year over the preceding 20 years. This outperformed its investment target of CPI plus 3 per cent over 10 years, and CPI plus 4 per cent over 20 years.
Looking at what performed well, Hostplus’ growth, like that of other funds, largely came from its exposure to global technology stocks, especially the “Magnificent Seven” – Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.
Nvidia’s value skyrocketed over the year, making the chipmaker the world’s most valuable company in June, while the broader technology sector benefited from an artificial intelligence investor frenzy.
“Credit was also completely out of this world in terms of its equity-like returns of low single digits,” Mr Sicilia said. “Infrastructure was also good as a strong mid-risk asset.”
The fund’s balanced pension option delivered growth of 8.4 per cent, while its indexed balanced option was among the strongest in the sector at 12.1 per cent.
“That’s the same story – we didn’t change anything [about our strategy] there. It just got swept up in the equity market,” Mr Sicilia said.