Fat cat or fit cat: Super funds ranked from best to worst on fees and performance

A ranking of big Aussie superannuation funds has shamed some of the largest financial services providers, with Stockspot’s annual Fat Cat Report showing the life-changing impact fund fees can have on performance.

Every year for the past seven years, online investment manager Stockspot has compared the 600 multi-asset investment options available from Australia’s 100 biggest super funds, with a focus on the funds’ performance after fees were taken into account. Stockspot compares the funds on the basis of their risk profile (aggressive, growth, balanced etc) to ensure it’s comparing like-for-like, and found that the very same funds topped the worst performers’ list yet again in the 2019 report.

Stockspot uses ‘Fit Cat’ to identify the top performing funds over five years, while the bottom performers are classified ‘Fat Cat’. While the names might sound jokey, Stockspot CEO Chris Bryki says the implications of high fees for super savers is very serious – to the tune of $200,000-plus over a lifetime of work.

Why super fund fees matter

“One of our golden rules of superannuation is; the less you pay, the more you get,” Bryki explained, going on to explain the big difference a little change like swapping from a fund that charges a 2 per cent fee to one that charges 1 per cent can make. “Always pay less than 1 per cent per annum in fees so your super isn’t eroded by high fees. I know 1 per cent doesn’t sound like a lot, but for the Aussies stuck in these Fat Cat Funds, they’ll be worse off by $200,000 or more compared to their friends who are in a low-fee fund.”

Even older Australians can benefit from a lower-cost fund, with Stockspot calculating that a 60-plus who changed from a 2 per cent fund to a 1 per cent fund could have $35,000 more in their super by retirement.

The latest StockSpot report said ANZ/One Path was the worst super provider for the seventh year in a row, with a total of 11 of its super funds in the Fat Cat ranking. ANZ/One Path was matched by under-fire wealth manager AMP, which also had 11 Fat Cat Funds, followed by Perpetual, MLC and Zurich who recorded four, three and three Fat Cats respectively.

The best and worst super funds

Industry super funds, meanwhile, dominated the Fit Cat rankings. Q Super came out on top with nine Fit Cat funds. UniSuper came in second with six and Australian Super followed closely behind with four. All three have an average annual fee of just 0.76 per cent.

As well as looking into the best and worst performers overall, the Fat Cat Report broke down super funds by risk profile. On the balanced option, for example, Q Super, Australian Super and UniSuper scored well, while AMP, OnePath and Perpetual failed to impress StockSpot.

For example, QSuper’s Lifetime Aspire 2 option delivered an 8.8 per cent return per annum over five years, compared to AMP Superannuation Savings Trust – AMP Capital Dynamics Market option, which recorded a 2.9 per cent return. Australian Super’s Conservative Balanced fund returned 7.8 per cent, compared to the MLC Super Fund Business Super – MC Inflation Plus – Moderate Portfolio, which sat at 4.1 per cent. You can read StockSpot’s Fat Cat Report to see the full performance rankings.

Overall, StockSpot found industry funds had 30 per cent lower fees on average than retail funds, while the industry funds’ higher allocation of unlisted assets such as property, infrastructure and private equity, had helped deliver strong returns at a time when equities markets have been battered.