Barefoot Investor Scott Pape has focused on the Superannuation Fund managers of Australia in his latest column, after the concerns of a reader about the performance of their Superannuation.
'I write you because I am worried about my super. I am with Australians, and lately they have had some things, “the reader explained.
'They lost $ 1 billion on a private equity deal, and this week it was reported that they invested $ 500 million in Nvidia just before it crashed! Their return has not been great, so I wonder what you would imagine I do. '
Mr Pape advised to assess Australiansuper on the basis of just a few poor investments.
“Their portfolio is so great that a few financial fireballs will not be so much as a cubicle for their overall return,” he wrote.
But Mr Pape also wondered why Superannuation Funds chose to choose shares instead of index funds, which are cheap and proven that they perform professional fund managers.
'This is what has always been stunned about the super industry: why do they even try to choose winners?
'The proof is crystal clear – Index Investing Works. In the long term, low-cost index funds perform eight times better than professional fund managers.
'And, the more money you have to invest, the harder it is to beat the market. Just ask Warren Buffett – he has not exceeded the index for 20 years. His advice? Stay with index funds. '
Financial adviser Scott Pape (photo) advised followers to consider the cheap index options of their superfonds about professional fund managers
Pape added Superannuation companies pay huge salaries to finance managers, which are historically lagging behind in the long term.
'So here is the choice that super funds make: investing in ultra-low-cost index funds, or our team of' experts' trust (which cost hundreds of millions of salaries each year) to choose investments for you.
'But here is the catch: these experts have only two in 10 chance to beat the long -term index. And to cover their wages, they must charge you nine times more costs than the index funds.
“Who would take on their full mind that deal? Answer: almost every large super fund in the country. '
Instead of leaving the Superanniety company all together, Pape suggested that the reader considered the options of Australiansuper's Index Fund.
“I don't mind Australians, especially their cheap index offers,” he said.
