Out on the table

Well, the negative super fund returns for 2007-08 are finally out on the table and are somewhat worse than had been widely expected a few months ago.

The median return of the 50 largest balanced fund portfolios surveyed by super fund researcher SuperRatings was a negative 6.4% for the last financial year. (The researcher defines a balanced portfolio as one with 60-76% growth assets.)

SuperRatings managing director Jeff Bresnahan highlights what I consider a fascinating figure: the wide gulf between the long-term returns of the best-performing and worst-performing balanced portfolios. This performance gap is a breathtaking 5.56% a year over a 10-year period!

"Had two people invested the same amount in balanced options of these two funds 10 years ago, the difference in their current benefit would be approximately 68%," Bresnahan says.

This long-term difference in fund returns underlines how some members could be paying high prices for not keeping a watch on their funds' performances. This is becoming increasingly crucial as fund balances grow.

Of course, being aware of a fund's performance doesn't mean that you should be tempted to respond to every negative annual return by moving your super savings around - far from it. Longer-term returns are those that truly matter.

As Bresnahan says: "This differential [in fund performance shown by his survey] goes to show that Australians need to get over their apathy towards superannuation or they may suffer the consequences."