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For most investors, super is a significant source of their wealth. More investors are looking to take more control of their super, including investing in ETFs and LICs. Today we have a look at the funds that allow you to invest in these investments.
For many investors, their largest store of wealth outside of their family home (if they own one) is their superannuation. With 9.5% of your salary directed to super and the tax incentives attached, super naturally becomes a growing portion of an individual’s wealth the longer they are part of the workforce.
One of the common questions we get asked at ETF Watch is how our readers can invest their super in ETFs and LICs. Until fairly recently, investors looking to take more control of where they invest their super were forced down the Self Managed Super Fund (SMSF) route or the Financial Adviser focused “Wrap” type platform. With reasonably high costs associated and additional trustee responsibility, to be economically viable, a SMSF requires significant funds available in super and a desire to bear more of the admin work, and often “Wrap” platforms are available only to Financial Advisers, therefore not meeting the needs of the self directed investor.
Many super funds have seen this growing desire of investors to take more control of their super, and now offer direct investment options. This allows investors to invest in direct shares, including ETFs and LICs for a fraction of the cost of an SMSF. Today we take a look at the options available to investors, the restrictions applicable and the costs associated with their direct investment options.
First we take a look at Industry Super Funds. These are the super funds that most Australians will have their super invested if they don’t make a choice of their fund. Each fund tends to have an industry that it supports. With all profits going back to members, Industry Funds argue that they provide a low cost option for your super.
Below we look at the 7 Industry Funds we have found that support a direct investment option. Whilst not an industry fund, we’ve also added ING Living Super to the mix here, as it displays many of the same attributes as the industry funds.
| Fund Name | ETFs | LICs | Supports other shares | Restrictions |
| Australian Super | 36 ETFs | None | ASX 300 only | Must Retain $5,000 or 20% in other options (whichever is greater) |
| CBUS Super | 21 ETFs | None | ASX 300 only | Must Retain $10,000 or 20% in other options (whichever greater) |
| HostPlus Super | 33 ETFs | 3 LICs | ASX 300 only | Must retain $2,000 or 20% in other options (whichever greater) |
| Legal Super | 65 ETFs | 33 LICs | 100 ASX 300 companies only | Must Retain $3,000 or 20% in other options (whichever greater) |
| Care Super | 32 ETFs | 9 LICs | ASX 300 only | Must retain $3,000 or 5% in other options (whichever greater) |
| Media Super | 21 ETFs | None | ASX 300 only | Must retain $2,000 or 10% in other option (which ver is greater) |
| NGS Super | 26 ETFs | None | ASX 300 only | Must retain $2,000 or 20% in other option (whichever is greater) |
| ING Living Super | 145 ETFs | 14 LICs | ASX 300 only | Must retain $500 or 1% in cash hub (whichever is greater) |
The above table shows a large variance in the offerings of each of the funds. For investors interested in LICs, options are much more limited, and even ETFs investors are limited with some of the providers. Each provider also mandates a proportion of total assets be held in other investment options (generally managed funds or cash), ranging from 1% to 20% of the account balance.
All of the funds listed above have additional costs associated with their direct investment options. Below we list these costs, as well as the brokerage costs associated with trading a listed investment. We also list the standard admin costs associated with the products. We’ve calculated the estimated fees on a $100,000 portfolio, of which $80,000 is invested in self directed options. Note that this excludes the underlying investment costs associated with ETFs, LICs or any of the super fund investment options.
| Fund Name | Direct investment fees | Brokerage costs | Other annual fund admin fees | Total admin cost for $100k |
| Australian Super | $395 annual fee | Starts at $15 | $78 per year + 0.11% of balance | $583 |
| CBUS Super | $240 annual fee | Starts at $19.95 | $78 per year + 0.15% of balance | $468 |
| HostPlus Super | $180 annual fee | Starts at $19.95 | $78 per year | $258 |
| Legal Super | $180 annual fee | Starts at $12.50 | $67.60 per year + 0.35% of balance | $598 |
| Care Super | $320 annual fee | Starts at $13.75 | $78 per year + 0.19% of balance | $588 |
| Media Super | $204 annual fee | Starts at $13.75 | $65 per year + 0.10% of balance | $369 |
| NGS Super | $247 annual fee + 0.10% pa asset based fee | Starts at $12.50 | $65 per year + 0.10% of balance | $492 |
| ING Living Super | $60 annual fee + 0.64% pa asset based fee | Starts at $20 | None (estimated Operational Risk fee applies though) | $572 |
Above you can see the direct investment fees range from $60 (plus an asset based fee) to $395. Trading costs begin from $12.50, however generally become percentage based beyond a certain trade size. For the hypothetical $100k portfolio, total admin costs range from $258 to $632. Some products include other fees which are difficult to estimate in the above apples to apples comparison, however don’t materially change the total fees.
At the beginning of this post, we briefly discussed ‘Wrap’ type super products. These products were traditionally only available to financial advisers, providing access to a large range of direct equities, managed funds and term deposits. A number of these have now opened their doors to self directed investors. Below we take a look at the three products we’ve found available to superannuation investors.
| Fund Name | ETFs | LICs | Supports other shares | Restrictions |
| Netwealth Super Accelerator | 117 ETFs | 34 LICs | ASX 200, some international shares | Must retain minimum cash balance |
| IOOF Pursuit Select | 36 ETFs | 12 LICs | ASX 300 only | Must retain minimum cash balance |
| BT Super Invest | 126 ETFs | 62 LICs | ASX 300 only | Must retain minimum cash balance |
The Wrap style products are less restrictive than the industry funds, with all products requiring just a minimum cash balance to be retained. All also provide access to a large unlisted managed fund list, with Netwealth also providing access to some international shares.
| Fund Name | Direct investment fees | Brokerage costs | Other annual fund admin fees | Total admin cost for $100k |
| Netwealth Super Accelerator Plus | Nil | Starts at $18.50 | $175 + 0.59% of balance | $765 |
| IOOF Pursuit Select | Nil | Unknown | 0.70% of balance | $700 |
| BT Super Invest | Nil | Starts at $12.50 | $500 + 0.35% of balance | $850 |
These products don’t include direct investment fees, and whilst all are priced higher than the industry fund alternatives, provide the greater flexibility as described earlier and the larger managed fund list which may appeal to some investors. All of the above also provide a tiered percentage based admin fee, meaning investors with more than $250,000 receive a price discount. Some of the industry funds also provided tiering or capping on their fees for those with larger balances.
We should note that we did have trouble locating the above information from both Netwealth and IOOF’s websites, and were unable to locate the document that listed the brokerage costs for the IOOF product.
Whilst the 11 super funds we have looked at provide the ability to invest in ETFs and LICs, all have limitations, and do not provide access to the full range of almost 300 ETFs and LICs available on the ASX. The only way for self directed investors to have total control over their super fund investments is through a SMSF.
SMSFs certainly aren’t for everyone, with increased trustee responsibility and the hassles and costs associated with fund administration. Nevertheless, with 600,000 SMSF in Australia, they have their appeal to many investors. Fund administration services start at around $1,000 per annum and an SMSF allows you to choose your favourite online broker and simply purchase your ETFs and LICs through them.
Have you had any experience with any of the super funds listed above, or do you know of other funds offering access to ETFs and LICs? Let us know in the comments below.
Whilst I don’t use the BT Super Invest product, I have a SMSF with BT Panorama which is built on the same platform. It cost BT hundreds of millions to build and is really nice to use. I assume Super Invest gives a similar user experience.
I’m on the BT Super Invest platform and it has a wide range of ETFs to invest in.
483 Shares and ETFs
62 Managed Funds
25 Managed Portfolios
24 Term Deposits
I’m in Netwealth Super Accelerator and very pleased with access to unlisted managed funds, direct shares including international as well as LICs, ETFs and IPO’s.
also no financial advisor required.
and without the admin hassles of a SMSF.
the best investment platform I’ve ever seen bar none.
Thanks for sharing Carlos. How did you find the sign up process with Netwealth? Their website wasn’t very user friendly whch made us think their signup process might have been poor.
Their support of international is a big plus.
sign up process was fairly lengthy but that is understandable when starting a Super fund. not a problem for me. once it’s done, I find monitoring my portfolio, and buying / selling shares, ETFs and managed funds on their website very easy and quick. even on the mobile phone. the range of investment options is staggering, including some excellent managed funds that are difficult to access and only normally available to wholesale investors. whoever would have thought 10 or 15 years ago that you could buy or sell individual international shares via a few clicks on your mobile phone for… Read more »
*Edit* sorry, didn’t see that Netwealth is included in the article. ignore!
Hostplus is the only one that will do an inspecies transfer across from accumulation to pension. This means that unless this is offered there is a whopping CGT bill going from accumulation to pension mode. That’s why I transferred from Australian Super to Choiceplus (Hostplus)
You sure about that? “…by using Seamless Transfer, you do not trigger a capital gains tax (CGT) event thereby avoiding tax on the gains you may have in Member Direct.”
https://www.australiansuper.com/investments/your-investment-options/member-direct
Cool – this was obviously updated in the Nov 2018 upgrade. It certainly was not on offer when I swapped across late 2017.
What about sunsuper? granted the offerings aren’t large, but they have a partnership with vanguard or something. I’ve got my super there, and you can choose to invest however much of your super into whichever vanguard etf you want. I’m curious about their fees though. How does their fees compare to the ones mentioned in the article above?
edit: according to https://www.sunsuper.com.au/members/why-sunsuper/fees-and-costs-in-your-super-savings-account , annual fees for $100,000 would be $178
Hi Shak. The SunSuper options are not ETFs, but Vanguard Managed Funds… These are essentially the same underlying investments but different structures. Since we’re ETF Watch, not Managed Fund Watch, we only included those that allow direct ETF investing. If all you are after are some basic Vanguard Index Funds, these could do the trick at lower cost than the direct investment options, and your options for super funds will be much higher, as plenty offer index investments these days. Hope this clarifies things.
Hi. Thanks for your reply. What is your source for this? I’ve read in several places that the SunSuper does offer ETF options. Eg: https://www.sunsuper.com.au/advisers/sunsuper-products/investments – I refer to the index options (passively managed) ones. While they don’t flat out say these are ETFs, the MER values are very close to the ETF MERs, so I guess I assumed they WERE ETFs. In fact, I used the ideas here: https://forums.whirlpool.net.au/archive/2635984 to recreate the Vanguard actively managed funds. I’m genuinely interested in your response, as I may have made a mistake if my information is wrong!
Hi Shak. SunSuper offers “Index Funds”, of which many ETFs are, but the index funds they are offering are Managed Funds, not ETFs. Index funds offer many of the benefits of ETFs (eg low cost), but can’t be traded on the ASX like an ETF.
It’s still a work in progress but you can check out ETF University which lists some of the difference between Managed Funds and ETFs (http://www.etfwatch.com.au/etf-lic-university/what-is-an-etf/) and some of the different ETF types that exist (http://www.etfwatch.com.au/etf-lic-university/). Hope this helps.