What's a good investment return?
We all like seeing high numbers – in our bank accounts, in our super accounts, on our footy team’s score card. But what does ‘high’ mean when it comes to your super investments, and how can you cut through the numbers to better understand the returns on your investment options?
How does a super fund measure a good return?
Each diversified investment option a super fund offers will have an investment return objective. This is called a 'CPI+ target' and you can find these in our Product Disclosure Statements or listed alongside the respective option online.
These figures are calculated by taking into account market data and modelling for each investment option. Often, we will surpass these benchmarks, however, they offer an important guide regarding our return expectations over the long term for each investment option.
The CPI+ target is expressed over a number of years, such as 10-year increments, and when it comes to investment returns it’s important to think long-term.
That’s because returns will fluctuate from year-to-year and are near impossible to predict over short periods. While any particular year may be great, or not so good, history shows that returns tend to move towards an average over longer time periods. While shorter term returns tend to garner media attention, looking at performance over an extended period is more aligned with super, which, after-all, is a long-term investment.
What about investment risk?
All investments fluctuate. Sometimes they’re-up, sometimes they’re down. So, it’s important to choose an investment mix that you’re comfortable with and that suits your risk tolerance.
Risk tolerance is determined by different factors, and the amount of risk you’re willing to be exposed to depends on you and your goals. For example, someone who is older and nearing retirement may want less exposure to higher risk investments, while someone younger might take more risk as they have greater opportunity to recoup any losses over the long term.
Generally speaking, you’re always looking to find the balance between risk and return and keep in mind the long-term nature of your investments in super.
Most funds offer a range of investment options, ranging from the security of cash and fixed interest to more growth driven options such as shares and property. This allows you to diversify your investment portfolio and pick a risk profile that suits your needs.
We also offer members a default investment strategy. So if you don't want to choose your investment option, your super will automatically be invested using our default strategy.
What about investment fees?
It is always important to bear in mind the role of fees in the long-term returns from super. Looking forward, given today’s very high valuations for most asset classes, we believe returns for coming years will be lower than what we’ve experienced recently. If returns are lower, the fees you’re paying become more important.
But while we are very mindful of the fees you pay, ultimately, what matters is the net return you receive. That is, what is the end result when you take into account fees and returns. This is what helps to build your wealth over the long term.
What are Catholic Super's investment returns?
Our default (Growth Plus)* option returned 14.6% for the 2021 calendar year. The return over ten years was an average of 11% p.a. which is well in excess of the CPI+ target.
For older members, the default (Balanced Growth)* option returned 12% for the 2021 calendar year. The return over ten years was an average of 9.2% p.a.
You can find a full breakdown of our investment returns in our investment performance section. We update these each month.
As a fund, we’re focused on long-term returns for our members. But for an immediate comparison of investment returns, please have a look at our comparison page.
See how we stack up against the competition
*Growth Plus is the default option for members up to the age of 51. From ages 51 to 53, the default option transitions from Growth Plus to Balanced Growth. Learn more about our default investment options.
Authorised by Togethr Trustees Pty Ltd (ABN 64 006 964 049; AFSL 246383) ('Trustee') the trustee of the Equipsuper Superannuation Fund (ABN 33 813 823 017). Catholic Super is a division of the Equipsuper Superannuation Fund (ABN 33 813 823 017). Financial advice services may be provided to members by the trustee's related entity.
Togethr Financial Planning Pty Ltd (ABN 84 124 491 078; AFSL 455010). The information contained herein is general information only. It has been prepared without taking into account your personal investment objectives, financial situation, or needs. It is not intended to be, and should not be, construed in any way as investment, legal or financial advice. Please consider your personal position, objectives, and requirements before taking any action. Past performance is not a reliable indicator of future performance.
© 2020 Togethr Trustees Pty Ltd. For further information please our contact our Service Centre on 1300 655 002 or visit our website: csf.com.au.