When it comes to choosing an appropriate investment option, super fund members rely on labels such as high growth, growth, balanced, moderate and conservative. They indicate that option’s key features and its underlying risks.
These five pre-mixed, diversified options are invested in a range of growth and defensive assets. The high-growth option invests 90%-100% of your money in shares and property, while the conservative option allocates 70% to cash and fixed interest and the rest in growth assets.
Remarkably, there are no regulatory rules or standards governing these labels. Instead, super trustees apply a growth/ defensive categorisation to their labels that is commonly agreed upon by the industry.
Xavier O’Halloran, director of Super Consumers Australia, says this categorisation doesn’t always work for consumers and can be unreliable.
“One of the ratings agencies did some work on labelling recently. There was so much category overlap. Those labelled as ‘balanced’ were very high growth compared to some of their peers once you looked at the assets they were actually invested in.”
He says consumers rely heavily on “truth in labelling” when it comes to making important decisions about their super because they don’t have the expertise to check the option’s underlying assets, particularly unlisted assets.
“Although they are disclosed, you won’t know, for example, whether the fund owns all of the asset, or part of it, or its current value.
This story is from the September 2023 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the September 2023 edition of Money Magazine Australia.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Is the public market shrinking?
Australia needs a healthy stock market to give companies access to funds and to allow retail investors to build wealth.
India: three steps to transformation
Massive investment and extensive reforms turbocharge the economy.
The ballet of business
Changing direction, products, models and marketing is a hard task for a business. We chart what it takes to turn a business around, plus profile four successful pivots.
Save money and the planet
Could the high cost of living give us the incentive we need to reduce how much water and energy we use or waste? These eco-friendly household tips will help you do just that.
AI adoption is the new black
Artificial intelligence is set to reshape the commercial world, and small enterprises can’t afford to miss the boat.
Spam attack! Murky laws jam our inboxes
Unwanted marketing material is one of the pain points of modern life.
From rags to riches in style
Rich Tran sported a bowl cut until he was 14 years old and had no intention of becoming a hairdresser.
New work deals are killing the 'old' office
The Covid pandemic and the subsequent lockdowns accelerated the trend to more people working from home. It was a mixed experience.
Points taken: the truth about rewards
Can hopping between credit cards really boost your frequent flyer haul and give you cheap or free travel - or is it doing more harm than good behind the scenes? Money puts it to the test.
Shortcuts to own a home
Innovative ideas with a focus on low costs and sustainability could help solve the housing crunch.