For all of my (admittedly short) professional life, my superannuation has been in Australian Super’s Sustainable Balanced fund.
I was more or less happy with this. Conventional wisdom says that non-profit industry super funds tend to perform better than commercial funds due to lower fees, and the sustainable option meant my money wasn’t being invested in too many companies I disagreed with.
However, I recently received a letter from Australian Super informing me of an upcoming change in their sustainable investment policies. The key paragraph was:
In the past our investment manager excluded companies that it believed to receive a significant proportion of their revenue (at least 5%) from the manufacture of sale of alcohol or tobacco, the operation of gaming facilities or the manufacture of gambling equipment, uranium extraction or the manufacture of weapons or armaments. This automatic exclusion will no longer take place.
Hah. Imagine that. Presumably they were sick of missing investment returns from companies like BHP that are involved in uranium.
Whatever their reasoning, chances are my money is now being invested in places I’d prefer it not to be, so I’ve been researching my options.
The obvious alternative is Australian Ethical Super. Their investment policies gel strongly with my preferences and my non-super investments with them have been performing well.
Being a commercial fund, a comparison of fees was in order. The results were surprising and a little disappointing.
$78/year administration costs 0.77% of account balance 0% of contributions
$41/year administration costs 2.15% of account balance, calculated weekly 4.1% of contributions
For the 08-09 financial year, Australian Ethical fees for my super balance would’ve been a little more than triple what I actually paid Australian Super. Bugger.
All this is ignoring historical returns for each fund, a topic that would demand an entirely separate blog post. The short of it is that over the previous 5 years, Australian Ethical seems to have performed worse on comparable funds.
So do I move? Are there other ethical super options out there? What premium am I willing to cop in return for having my money invested in ethical companies?