Thinking of switching Super Funds again? Here’s why chasing returns can backfire

It’s one of the most common questions from people approaching, or already in, retirement.

You open your six-monthly super statement, look at the return, and feel flat. Especially if you’ve already switched funds once, hoping for better results, only to feel like you’ve backed the wrong horse again.

The instinctive reaction is simple: Maybe I should move my money somewhere else.

Before you do, take a breath. Because repeatedly switching super funds based on recent performance is one of the most expensive mistakes Australians make with their retirement savings.

And it’s not because people are careless. It’s because super is confusing, markets move in cycles, and the industry doesn’t make comparisons easy.

Let’s start with the uncomfortable truth that appears – usually in very small print – on every super fund advertisement: past performance is not a reliable indicator of future performance.

That warning exists for a reason.

The real driver of returns (and it’s not the brand)

Many people assume the biggest drivers of performance are things like brand reputation, being “not-for-profit”, or having low fees. While fees matter over the long term, they are not the main reason one fund outperforms another over short or medium periods.

The biggest driver of returns is something far less glamorous: asset allocation.

That’s simply the mix of investments your super is held in – Australian shares, international shares, property, infrastructure, fixed interest and cash.

If your fund holds more shares and markets rise, returns look great. If markets fall, returns suffer. It’s that simple.

This is where many comparisons go wrong.

Not all “balanced” funds are balanced

One of the great traps in super is assuming that investment labels mean the same thing across funds.

They don’t.

There is no legal definition of what a “balanced” fund must hold. One fund’s balanced option might have 70 per cent in growth assets like shares and property. Another might have closer to 55 per cent.

In other words, one fund’s balanced option can look very much like another fund’s high-growth option.

If you compare returns without checking the underlying asset mix, you’re not comparing apples with apples.

Timing matters more than most people realise

Another common mistake is comparing different time periods.

A difference of just a few months – particularly in volatile markets like we’ve seen through 2023, 2024 and into 2025 – can dramatically skew results.

If one fund is measured from January and another from April, the apparent “winner” may simply have benefited from market timing, not superior management.

That’s why short-term comparisons are dangerous.

Look longer, not louder

If you want to assess how well a fund is really performing, look at medium to long-term returns.

My rule of thumb is at least three years, preferably five or more.

Anyone can look clever for a year or two when markets favour their asset mix. The real test is how consistently a fund performs across different market conditions.

Today, this information is easier to access than ever.

The federal government’s superannuation heat map, and the comparison tools available through MyGov and the ATO, allow you to compare your fund against others with similar investment profiles. Importantly, these tools already know which fund you’re in and how your money is invested.

They are far more useful than television ads or online campaigns designed to tug at your emotions.

You may not need to switch funds at all

Here’s the part many people miss.

After doing proper comparisons, you may find that the fund you’re considering switching to hasn’t done anything magical at all. It may simply have a higher exposure to shares.

If that’s the case, you may be able to achieve a similar outcome by changing investment options within your existing fund, rather than switching funds entirely.

That can save paperwork, avoid disruption, and keep insurance arrangements intact.

But there’s a crucial catch.

Higher returns usually mean higher risk

If the better performance you’re seeing is largely driven by recent share market gains, moving your money to chase that return means taking on more risk.

For someone in their 60s or beyond, that’s not automatically wrong – but it does need to be a conscious decision.

Risk should be aligned with your time frame, income needs and emotional comfort, not with last year’s headline returns.

Superannuation works best when decisions are deliberate, not reactive.

Switching funds repeatedly based on recent performance can lock in losses and expose you to risks you didn’t intend to take.

Before making another move, check the asset allocation, line up the time periods, look beyond short-term results and ask whether a change inside your current fund might achieve the same outcome.

Sometimes the smartest move is not doing something new – but understanding what you already have.