Sunsuper Advice (Australian Superannuation)

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Topic Author
codchops
Posts: 11
Joined: Fri Mar 05, 2021 5:54 pm

Sunsuper Advice (Australian Superannuation)

Post by codchops »

Hi All,

Background
I'm 39 and have c. $200k in my super which is, and has been invested since I moved to Australia in 2007, in SunSuper's Lifecycle Investment Strategy - Balanced.

My wife's super is invested in the same fund and I believe her balance is around the $100k-$120k mark.

We are currently not making any additional contributions to our super.

We have two children who are 2 and 6.

Outside of my super, I currently have $9k invested in ETFs and plan to invest in these as often as I can, they are:

VAS - 20%
VGS - 70%
VAE - 10%

Fee Comparison
I have been reviewing the annual fees charged with SunSuper's Lifecycle Investment Strategy (balanced) and for every $50k invested they are:

Base fee: $120
Performance related fee: $15
Indirect Cost Ratio: $295
Total: $430
Total on my current $200k balance: $1,720 (4 x $430)

When I compare these fees against Sunsuper's International Shares Index - Unhedged, the add up to a big amount per year, which given I can't access my Super for another 20 years, will add up over that time.

Base fee: $50
Performance related fee: $0
Indirect Cost Ratio: $5
Total: $55
Total on my current $200k balance: $220 (4 x $55)

Questions
Have I understood the fees and charges correctly in my calculations above?

Fees aside, what are the pros and cons of sticking with my current Sunsuper plan, I understand that going 100% international shares unhedged would be riskier.

What do others on this forum do with their super? I wouldn't be comfortable self-managing my Super.
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asset_chaos
Posts: 2007
Joined: Tue Feb 27, 2007 6:13 pm
Location: Melbourne

Re: Sunsuper Advice (Australian Superannuation)

Post by asset_chaos »

Our wiki has pages on Australian super with indexed options. As you've seen Sunsuper's default options are costly, but Sunsuper has good, low-cost index funds---and not just for ex-Au stocks. Last I looked, their index funds covered
  • S&P/ASX 300 Accumulation Index
  • MSCI World Index ex-Australia (unhedged in Australian dollars)
  • Bloomberg AusBond Composite 0+ Yr Index
  • Bloomberg Barclays Global Aggregate Index, hedged to $A
From those four funds you can build your own global balanced super fund with as much or as little home bias as you like, that will cost around 33 basis points inclusive of the fixed dollar cost, depending on exactly the proportion of each fund you want. Sunsuper is not the only place an Australian can find good, low-cost index funds to use for super, but it has one of the best offerings. For what it's worth Vanguard AU says they will start up a super fund later this year.

The wiki page is a bit out of date (disclaimer: I wrote the page), but the spreadsheet mentioned and linked in the wikipage is more up-to-date with newer options and updates to fees.
Regards, | | Guy
andrew99999
Posts: 840
Joined: Fri Jul 13, 2018 8:14 pm

Re: Sunsuper Advice (Australian Superannuation)

Post by andrew99999 »

As asset_chaos said, you can switch to their low-cost index options, and I would definitely do that.

Sunsuper's low-cost index funds are great. They are/were managed by Vanguard, although Vanguard has decided to stop since they are coming out with their own super this year, so SunSuper will have to find another fund manager, but I assume the funds will likely be the same or very similar since they set up the structure, so there is no need to sell anything and Vanguard was simply managing it.

Here's a link on using SunSuper funds to replicate VDHG if you are interested.
https://forums.whirlpool.net.au/archive/2635984
Jaymover
Posts: 91
Joined: Wed May 12, 2021 8:19 pm

Re: Sunsuper Advice (Australian Superannuation)

Post by Jaymover »

When I compare these fees against Sunsuper's International Shares Index - Unhedged, the add up to a big amount per year, which given I can't access my Super for another 20 years, will add up over that time.
Barefoot investor etc are all into low cost index super funds. It is interesting however that for the last 10 years at least, many of the premix options (with low cost industry funds) have outperformed the low cost index funds even after taking into account fees.

I guess we don't know what the future holds, but I suspect that in the likely low yield future, net fees matter even more so perhaps the low cost index super funds will outperform the premix options over the next 10 years or so.

I cant really work out why the premix options have outperformed. Is it the power of alternatives, LICs, unlisted assets on their books, or dynamic asset allocation?

One thing I have noticed however is that the premix options are often less volatile as they have been set up that way. Even though Bogleheads would recommend low fees and index, lower volatility is very attractive and may be worth the fees as you get older and approach your retirement age.

My Qsuper balanced fund only dropped about 10% in the 2020 crash but has returned around 8.19 percent per annum over the last 10 years which is comparable to some of the index options with comparable AAs. Pure shares have done such a stunning runner of late it is a bet as to whether they will hold up against unlisted assets etc. Obviously should have gone from premix to index in March last year and made a killing.
pseudoiterative
Posts: 240
Joined: Tue Sep 24, 2019 6:11 am
Location: australia

Re: Sunsuper Advice (Australian Superannuation)

Post by pseudoiterative »

codchops wrote: Sun May 16, 2021 6:20 pm Have I understood the fees and charges correctly in my calculations above?
Your understanding of the non-admin fees seems correct.

You also need to add in the the sunsuper admin fee of $1.50 per week plus 0.1% of the first $800k of your account balance. This is addition to all the fees you list above. I believe you need to pay the same admin fees regardless of which sunsuper option you pick. It'd come to about $278 / yr for a balance of $200k. You could ignore the admin fee when comparing between different sunsuper funds but it might be significant if you want to compare against super options from a different super provider.
What do others on this forum do with their super? I wouldn't be comfortable self-managing my Super.
I am using vision super's "sustainable balanced" fund. I chose it due to a mix of low-cost passive indexed investing (bogleheadish) with a "sustainable" tilt. Currently 60% of the asset allocation is in a mix of australian & international stocks, with 10% property, 10% cash and 20% fixed income.

Not everyone cares about sustainable investing (I have mixed beliefs about if it is effective or not, but let's park that discussion). I am also a bit skeptical about paying a bunch of admin and investment fees fees to park 30% of assets in cash and fixed income where they will earn essentially zero income -- but on another hand, there's some value to outsourcing my asset allocation decisions to people who think differently than I do, since I am not necessarily going to make good decisions (outside of super accounts I pick my own asset allocation with a much smaller fixed income and much higher international share exposure).

For a balance of $200k vision super's "sustainable balanced" fund would have fees and costs of about 0.33% compared to the 0.81% of SunSuper's Lifecycle Investment Strategy - Balanced.
andrew99999
Posts: 840
Joined: Fri Jul 13, 2018 8:14 pm

Re: Sunsuper Advice (Australian Superannuation)

Post by andrew99999 »

Jaymover wrote: Mon May 17, 2021 12:05 am My Qsuper balanced fund only dropped about 10% in the 2020 crash but has returned around 8.19 percent per annum over the last 10 years which is comparable to some of the index options with comparable AAs. Pure shares have done such a stunning runner of late it is a bet as to whether they will hold up against unlisted assets etc. Obviously should have gone from premix to index in March last year and made a killing.
QSuper balanced is quite a bit different to other funds. It holds only about 45% equities, has quite a bit of bonds, including long term bonds which do well in a market downturn when interest rates fall, and they also have more direct property and infrastructure. It was designed as a bit of a risk parity portfolio intended to be less volatile so that its retired members can count on it more.

It has done a good job, but since the start of it, interest rates have come down steadily over the last 10 years, which is why the returns were at least as good as other balanced funds (or index funds) which generally contain about 60-70% growth assets, but with lower volatility. Since interest rates are 0.10% and can not conceivably fall to -4%, that return is going to be impossible to achieve over the next 10 years. I would expect lower returns along with the lower volatility. Still a good fund, but be aware of what you are invested in.

Alternately, AusSuper's "balanced" fund actually has 80% in growth assets which explains the higher performance. By just using more growth assets and going with indexing, you would have done comparably well.
Topic Author
codchops
Posts: 11
Joined: Fri Mar 05, 2021 5:54 pm

Re: Sunsuper Advice (Australian Superannuation)

Post by codchops »

asset_chaos wrote: Sun May 16, 2021 7:43 pm Our wiki has pages on Australian super with indexed options. As you've seen Sunsuper's default options are costly, but Sunsuper has good, low-cost index funds---and not just for ex-Au stocks. Last I looked, their index funds covered
  • S&P/ASX 300 Accumulation Index
  • MSCI World Index ex-Australia (unhedged in Australian dollars)
  • Bloomberg AusBond Composite 0+ Yr Index
  • Bloomberg Barclays Global Aggregate Index, hedged to $A
From those four funds you can build your own global balanced super fund with as much or as little home bias as you like, that will cost around 33 basis points inclusive of the fixed dollar cost, depending on exactly the proportion of each fund you want. Sunsuper is not the only place an Australian can find good, low-cost index funds to use for super, but it has one of the best offerings. For what it's worth Vanguard AU says they will start up a super fund later this year.

The wiki page is a bit out of date (disclaimer: I wrote the page), but the spreadsheet mentioned and linked in the wikipage is more up-to-date with newer options and updates to fees.
Thanks all for the replies and sorry for not replying sooner, I didn’t receive a notification that anybody had responded to me.

I would definitely prefer to have my super similarly invested to my ETF portfolio, e.g. MSCI, ASX300 etc., particularly given the big difference in fees. But I just assumed that you could only pick one of their index options to be invested in, otherwise I would need to self manage the fund?

Probably best if I set up a call with one of Sunsuper’s advisors and get them to run me through my options. If I can invest in a global spread of index’s for the one low fee, that would be perfect for me.
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asset_chaos
Posts: 2007
Joined: Tue Feb 27, 2007 6:13 pm
Location: Melbourne

Re: Sunsuper Advice (Australian Superannuation)

Post by asset_chaos »

No worries. I'm with FirstState (or whatever they call themselves nowadays) and there little to no management is needed with the equivilent four funds. There's a page where you set up how future contributions are split. Say you've set 40% gobal stocks, 10% Au stocks, 40% global bonds, 10% Au bonds, then every contribution amount is automatically split up as you've specified and invested into the specified funds. If you or your employer are making regular contributions that tends to keep your asset allocation in line with what you want.

Switching to a new investment mix is similar. There's a page with all the investing options available, with existing percentage in each option and a box to enter new percentage. You put whatever percentages you want in the indexed options and a zero in the existing option, press go, and it just happens. I'd be surprised if SunSuper didn't have something similar. Go for it.
Regards, | | Guy
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