Worked Examples and Checklists
Super investment option fees compared: indexed, balanced, high growth and lifecycle
How fees and risk differ between super investment options in Australia, with an illustrative comparison of four options and a method for choosing on cost and strategy.
Within one super fund, fees can vary more between investment options than between funds. Indexed options usually cost least, actively managed diversified options (such as most MySuper balanced or growth options) sit in the middle, and options with heavy exposure to unlisted assets or performance fees usually cost most. But the option also sets your risk and expected return, which matters more than the fee over a long period. Choose the strategy first — how much growth exposure suits your age and comfort with ups and downs — then compare costs among options with a similar strategy.
This guide is part of the fund comparison checklist section. Fees, returns and risk descriptions below are illustrative, not any fund's figures. General information only, not financial advice.
Common option types
| Option type | What it holds (typical) | Risk level (typical) | Cost tendency |
|---|---|---|---|
| Cash | Bank deposits, short-term money market | Very low; may not keep up with inflation | Lowest |
| Conservative | Mostly cash and bonds, some shares | Low to medium | Low to moderate |
| Balanced / growth (often the MySuper option) | Around 60–80% growth assets: shares, property, infrastructure | Medium to high | Moderate |
| Indexed diversified | Similar mix, but tracking market indices | Medium to high | Low |
| High growth | Mostly shares and other growth assets | High | Moderate |
| Single-sector (e.g. Australian shares) | One asset class only | Varies; often high | Low (indexed) to higher (active) |
| Lifecycle (some MySuper products) | Growth mix that automatically becomes more defensive with age | Changes with age | Varies by age group |
Labels are not standard across funds: one fund's "balanced" may hold far more shares than another's. Check the asset allocation and the fund's standard risk measure, which estimates how many negative years to expect in 20.
Illustrative comparison: four options, one fund
Illustrative fund, $100,000 balance, administration fee $1.20 a week + 0.15% for all options.
| Indexed diversified | Balanced (active) | High growth (active) | Conservative | |
|---|---|---|---|---|
| Investment fees and costs | 0.10% | 0.55% | 0.65% | 0.40% |
| Transaction costs | 0.02% | 0.10% | 0.12% | 0.05% |
| Admin (all options) | $62 + $150 | $62 + $150 | $62 + $150 | $62 + $150 |
| Total yearly cost | $62 + $270 = $332 | $62 + $800 = $862 | $62 + $920 = $982 | $62 + $600 = $662 |
| As % of balance | 0.33% | 0.86% | 0.98% | 0.66% |
Working for the balanced option: admin flat fee $1.20 × 52 = $62.40, rounded to $62; percentage fees 0.15% + 0.55% + 0.10% = 0.80% of $100,000 = $800.
The indexed option is about $530 a year cheaper than the active balanced option at this balance. Whether that makes it better depends on net returns over time: if the active option earned more than 0.53 points a year extra after costs, it came out ahead in that period; if not, the indexed option did. Past results do not guarantee either outcome.
Comparing the long-term effect
Using the fee drag projection with $100,000, $750 a month going in and 25 years:
- illustrative 6.4% return after fees: about $1,046,000
- illustrative 5.9% return after fees (0.5 points of higher cost, no extra return): about $947,000
If the higher-cost option delivers no extra return, the cost is around $99,000. If it delivers 0.5 points of extra return after its higher fees, the two come out the same. The calculation shows what an active option has to achieve to justify its price.
Choosing an option: a short method
- Time horizon. How many years until you expect to start drawing on super? Longer horizons can usually carry more growth assets.
- Tolerance for falls. Could you stay invested if your balance dropped 15–20% in a bad year? Switching to cash after a fall locks in the loss.
- Pick a strategy band — conservative, balanced, growth or high growth.
- Compare costs within the band, including indexed versions if your fund offers them.
- Compare net returns over 10 years of options in that band, across funds if you are considering a move.
- Check the performance test status of trustee-directed options; see the performance test guide.
- Review every few years, especially within 10 years of retirement.
Switching options: costs and timing
Switching within a fund may involve a buy/sell spread and, in some funds, a switching fee; see buy/sell spreads and switching fees. A switch is processed at the next unit price, so the timing is not under your control. Repeated switching to chase recent returns tends to cost more in missed recoveries than it saves.
Lifecycle products and your age
If you are in a lifecycle MySuper product, your option changes automatically as you age. Your fees and expected returns change with it. Check:
- the age at which the mix starts to become more defensive;
- how much growth exposure you will have at 60 and 65 — many people need growth assets for decades after retiring;
- whether you can opt out into a single diversified option if the glide path does not suit you.
For how option costs play out over a working life, see the fee drag worked example; for the retirement phase, see account-based pension fees; and check default insurance before moving between funds with insurance inside super.
Frequently asked questions
Is the MySuper option always the cheapest?
No. MySuper products are designed to be low-cost defaults, but many funds offer an indexed option that costs less. Compare the options in your fund.
Do ethical or sustainable options cost more?
Some do and some do not. Compare their fees, asset mix and net returns like any other option, and read how the fund defines its screens.
Can I split my balance between options?
Most funds let you split your balance and future contributions across several options, each with its own fees and spread.
Should I move to cash before retiring?
That depends on your plans, but retirement can last 25 years or more, and holding only cash can leave your savings losing value to inflation. Consider advice.
Official sources
- Moneysmart — super investment options and risk
- ATO — YourSuper — net returns and fees of MySuper products, including lifecycle products
- APRA — performance test results for trustee-directed products
- ASIC — guidance on fee disclosure and the standard risk measure
