By ASHLEY NICKEL FOR DAILY MAIL AUSTRALIA

Published: 02:45 GMT, 9 February 2025 | Updated: 03:03 GMT, 9 February 2025

Barefoot Investor Scott Pape has taken aim at Australia’s superannuation fund managers in his latest column, following a reader’s concerns about the performance of their superannuation.

‘I’m writing to you because I’m worried about my super. I’m with AustralianSuper, and lately, they’ve had some stuff-ups,’ the reader explained.

‘They lost $1billion on a private equity deal, and this week it was reported they invested $500million in Nvidia right before it crashed! Their returns haven’t been great, so I’m wondering what you’d suggest I do.’

Mr Pape advised against judging AustralianSuper based only on a few bad investments.

‘Their portfolio is so huge that a couple of financial fireballs aren’t going to be so much as a cinder to their overall returns,’ he wrote.

But Mr Pape also questioned why superannuation funds opted to pick stocks instead of index funds, which are low-cost and proven to out perform professional fund managers.

‘This is what’s always baffled me about the super industry: Why are they even trying to pick winners?

‘The evidence is crystal clear – index investing works. Over the long run, low-cost index funds outperform professional fund managers eight times out of 10.

‘And, the more money you have to invest, the harder it is to beat the market. Just ask Warren Buffett – he hasn’t outperformed the index in 20 years. His advice? Stick with index funds.’

Financial advisor Scott Pape (pictured) advised followers to consider their super fund’s low-cost index options over professional fund managers

Pape added superannuation companies are paying huge salaries to fund managers, who historically have underperformed over the long term.

‘So here’s the choice that super funds are making: Invest in ultra-low-cost index funds, or trust our team of ‘experts’ (who collectively cost hundreds of millions in salaries each year) to pick investments for you.

‘But here’s the catch: These experts have only a two in 10 chance of beating the index over the long term. And to cover their wages, they’ll have to charge you nine times more in fees than the index funds.

‘Who in their right mind would take that deal? Answer: almost every major super fund in the country.’

Rather than abandoning the superannuation company all together, Pape suggested the reader consider AustralianSuper’s index fund options.

‘I don’t mind AustralianSuper, especially their low-cost index offerings,’ he said.

Australia’s top super funds during past decade

1. HOSTPLUS BALANCED: 8.4 per cent average annual returns

2. AUSTRALIAN RETIREMENT TRUST – SUPER SAVINGS BALANCED: 8.3 per cent

3. AUSTRALIANSUPER – BALANCED: 8.1 per cent

4. UNISUPER – BALANCED: 7.9 per cent

5. CBUS – GROWTH (MY SUPER): 7.8 per cent

6. VISION SUPER – BALANCED GROWTH: 7.8 per cent

7. HOSTPLUS – INDEXED BALANCED: 7.7 per cent

8. HESTA – BALANCED GROWTH: 7.7 per cent

9. AWARE SUPER – FUTURE SAVER: 7.7 per cent

10. CARESUPER – BALANCED: 7.6 per cent 

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Barefoot Investor Scott Pape calls out Australia’s superannuation funds

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