Middle of the super pack Vanguard pushes low fees

Vanguard Super is promoting the importance of low fees in combination with investment performance, as it reported 2023/24 middle of the pack investment returns.

In what represented Vanguard Super’s first full financial year, the fund reported returns which were on par or slightly better with the leading industry and retail funds, with its high growth option returning 13.18% compared to AMP’s high grown MySuper option at 11.14% and CFS delivering 14.3%

Vanguard’s MySuper Lifecycle (age 47 and under cohort) option delivered 13.20% while the CFS FirstChoice Employer Super growth fund (MySuper Lifestage 1975-79) option delivered 14.3%

At the same time CFS claimed 12.1% from its balanced option, compared to Vanguard’s 8.11%.

Vanguard Asia-Pacific chief investment officer, Duncan Burns said that while it was still early days, he believed the company had started strongly.

Further, he stressed the company’s fee approach saying the positive performance results followed an across-the-board fee cut for Vanguard Super members that came into effect on 1 May 2024. Administration fees across all products were reduced from 0.35% to 0.33%, and the administration fee cap was lowered from $850,000 to $300,000.

“Investment performance absolutely matters, but so do fees and costs, and neither should be viewed in isolation,” Burns said.

“Coupled together, investment performance, and fees and costs are the factors that will materially impact your superannuation balance at retirement.”

The company claimed that as a result of the fee reductions, Vanguard Super’s default MySuper Lifecycle product is one of the lowest cost MySuper products for Australians across a range of ages and balances, with fees for Lifecycle Age 47 and under option 30 per cent less than the industry average].

“We know from our most recent How Australia Retires survey that almost 1 in 2 Australians don’t know what they pay in superannuation fees – and that’s concerning.

“We’re doing our bit at Vanguard Super to ensure our members not only benefit from our low fees, but also have clear information about their fees,” Burns said.

The company’s announcement pointed out that the Vanguard fund was heading towards $1.5 billion in funds under management.

“By using indexed solutions for all Vanguard Super products, we’ve been able to keep our costs low while still delivering value and strong performance for our members so they can retire with confidence,” Burns said.