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Which super funds allow you to invest in ETFs & LICs?

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.

By ETF Watch - Apr 06, 2018

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.

Industry Super Funds

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 NameETFs LICsSupports other sharesRestrictions
Australian Super36 ETFsNoneASX 300 onlyMust Retain $5,000 or 20% in other options (whichever is greater)
CBUS Super21 ETFsNoneASX 300 onlyMust Retain $10,000 or 20% in other options (whichever greater)
HostPlus Super33 ETFs3 LICsASX 300 onlyMust retain $2,000 or 20% in other options (whichever greater)
Legal Super65 ETFs33 LICs100 ASX 300 companies onlyMust Retain $3,000 or 20% in other options (whichever greater)
Care Super32 ETFs9 LICsASX 300 onlyMust retain $3,000 or 5% in other options (whichever greater)
Media Super21 ETFs  NoneASX 300 onlyMust retain $2,000 or 10% in other option (which ver is greater)
NGS Super26 ETFsNoneASX 300 onlyMust retain $2,000 or 20% in other option (whichever is greater)
ING Living Super145 ETFs14 LICsASX 300 onlyMust 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.

What are the costs?

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 NameDirect investment feesBrokerage costsOther annual fund admin feesTotal admin cost for $100k
Australian Super$395 annual feeStarts at $15$78 per year + 0.11% of balance$583
CBUS Super$240 annual feeStarts at $19.95$78 per year + 0.15% of balance$468
HostPlus Super$180 annual feeStarts at $19.95$78 per year$258
Legal Super$180 annual feeStarts at $12.50$67.60 per year + 0.35% of balance$598
Care Super$320 annual feeStarts at $13.75$78 per year + 0.19% of balance$588
Media Super$204 annual feeStarts at $13.75$65 per year + 0.10% of balance$369
NGS Super$247 annual fee + 0.10% pa asset based feeStarts at $12.50$65 per year + 0.10% of balance$492
ING Living Super$60 annual fee + 0.64% pa asset based feeStarts at $20None (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.

Retail ‘Wrap Style’ Super Funds

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 NameETFsLICsSupports other sharesRestrictions
Netwealth Super Accelerator117 ETFs34 LICsASX 200, some international sharesMust retain minimum cash balance
IOOF Pursuit Select36 ETFs12 LICsASX 300 onlyMust retain minimum cash balance
BT Super Invest126 ETFs62 LICsASX 300 onlyMust 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 NameDirect investment feesBrokerage costsOther annual fund admin feesTotal admin cost for $100k
Netwealth Super Accelerator PlusNilStarts at $18.50$175 + 0.59% of balance$765
IOOF Pursuit SelectNilUnknown0.70% of balance$700
BT Super InvestNilStarts 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.

What about a Self Managed Super Fund?

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.

What do you think?

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.

 

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valDonaldETF WatchsompholShak Recent comment authors
Jimbo
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Jimbo

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.

Kris
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Kris

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

Carlos
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Carlos

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.

Shak
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Shak

*Edit* sorry, didn’t see that Netwealth is included in the article. ignore!

Mr Home Maker
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Mr Home Maker

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)

Chris P
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Chris P

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

Mr Home Maker
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Mr Home Maker

Cool – this was obviously updated in the Nov 2018 upgrade. It certainly was not on offer when I swapped across late 2017.

Shak
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Shak

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

somphol
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somphol

Do you think QSuper Self Invest should be added to the list as well?

https://qsuper.qld.gov.au/our-products/investment-options/self-invest

Donald
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Donald

Any chance you guys will do an update for 2019? Very helpful article though I cant reproduce the same numbers on the 100k as I am trying to calculate the comparison cost for other amounts. Thanks

val
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val

Some of the numbers don’t add up, for example ING Living Super $572 it should be $700. My plan was just to invest directly in VAS, VGB and VGS ETFs. So I compared Hostplus Choiceplus and ING Living Super.. Any other recommendations? HOSTPLUS CHOICEPLUS + seems cheaper $180 + $78, cheaper as balance grows, not sure if I missed something as it is too good to be true – CGT daily calculated on unrealized gains and quarterly CGT provisions – allocation limitations on ASX shares and ETFs up to 80% total and up to 20% per allocation and subject to… Read more »

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