Fees, Comparisons and 2026 Rules
Super investment fees, performance fees and indirect costs: what the percentages mean
How investment fees and costs, performance fees and transaction costs work in Australian super, why they vary by option, and how to read them in a PDS.
Investment fees and costs are what your super fund charges to manage the money in the investment option you are in. They are quoted as a percentage of the amount in that option and usually include a base management fee, any performance fee paid to managers who beat a target, and costs incurred inside underlying funds. Transaction costs — brokerage, settlement and similar costs of buying and selling assets — are shown on a separate line. Most of these costs are taken out of the option's returns rather than deducted from your account as a visible fee, which is why they are easy to miss. In many products they are the largest cost a member pays.
This guide expands the investment lines of the super fund fees overview. All figures are illustrative. General information only, not financial advice.
What sits inside "investment fees and costs"
| Component | What it is | How you pay it |
|---|---|---|
| Base investment fee | The fund's or its managers' fee for managing the option | Usually taken from the option's returns; occasionally deducted from your account |
| Performance fees | Extra fees paid to external managers when they beat an agreed benchmark | Taken from returns; disclosed as an average over recent years |
| Indirect costs of underlying funds | Fees charged inside the managed funds, pooled vehicles or unlisted assets the option invests in | Taken from returns |
| Transaction costs (separate line) | Brokerage, buy/sell spreads of underlying funds, settlement costs, some derivative costs | Taken from returns |
Because these costs reduce the option's unit price or crediting rate before returns are given to you, you never see a separate deduction for them on your statement in many funds. Your statement should nonetheless show the estimated dollar amount of indirect costs for the year. That is the figure to look for.
Why performance fees deserve a closer look
Performance fees are paid only when a manager beats a benchmark, so in a good year the disclosed investment cost can rise. Disclosure rules require funds to show performance fees as an average over a period (generally five years) rather than only the last year, so a single strong year does not distort the figure.
Three questions to ask about performance fees:
- Is the benchmark a fair hurdle? A manager that is paid for beating cash while investing in shares is being paid for market movements, not skill.
- Is there a high-water mark? This stops a manager being paid twice for recovering earlier losses.
- How large are they across the option? If performance fees are a large part of the total, your net return will be more variable year to year.
You cannot negotiate these terms as a member, but you can choose an option where performance fees are small or nil if that matters to you.
Why costs differ so much between options
| Option type (illustrative) | Typical drivers of cost | Cost tends to be |
|---|---|---|
| Cash | Low management effort, no trading | Lowest |
| Indexed diversified | Tracks market indices with little trading | Low |
| Balanced or growth (active, MySuper default) | Mix of active managers, some unlisted assets | Moderate |
| Options with high unlisted assets (infrastructure, private equity, unlisted property) | Specialist managers, valuation and deal costs, performance fees | Higher |
| Single-sector active (e.g. small companies) | Active stock picking, higher turnover | Moderate to higher |
These are general tendencies, not rules: a well-run active option can cost less than another fund's indexed one. Look at the actual figures in the PDS for each option you consider. See investment option fees compared for a worked comparison.
Worked example: visible fee versus total cost
Illustrative balanced option, balance $120,000:
- Administration: $1.00 a week + 0.15% = $52 + $180 = $232
- Investment fees and costs: 0.60% (including 0.08% performance fees averaged) = $720
- Transaction costs: 0.10% = $120
Total: $232 + $720 + $120 = $1,072 a year, about 0.89%.
On the account statement this member may see only the administration deduction, $232, listed as a fee. The other $840 is taken out of returns before they are credited. Comparing funds on the visible fee alone would understate this option's cost by more than three quarters.
Now suppose the gross return before investment and transaction costs is 7.0%. The return credited to the member would be roughly 7.0% − 0.60% − 0.10% = 6.3%, before the administration fee is deducted and before taxes inside the fund. Super funds report returns after investment costs and fund taxes, which is why the net return figures on YourSuper and in fund reports are the most useful comparison of outcomes.
How to check the investment costs of your option
- Find out which option your money is actually in. If you never chose, it is likely to be the fund's MySuper option.
- Open the PDS or the fund's investment guide and find the fees and costs table for that option.
- Note the investment fees and costs percentage and the transaction costs percentage separately.
- Add them to the administration fee and enter the total in the annual super fee calculator.
- Check the net return of the same option over 5 to 10 years, and for MySuper products compare it on the YourSuper comparison tool.
- If you hold a choice option with high costs, check whether it has been assessed in APRA's annual performance test, which covers MySuper and many trustee-directed products.
Investment costs and switching
Moving to a lower-cost option can reduce fees, but it can also change your risk level and future returns. Switching between options may also involve a buy/sell spread; see buy/sell spreads and switching fees. Choose an option for its strategy and risk first, then compare costs among options with a similar strategy.
Frequently asked questions
Why can't I see investment fees on my statement?
In most funds they are deducted within the option before returns are credited, so they appear as estimated indirect costs rather than a line-by-line deduction. Look for "indirect costs of your investment" or similar on the annual statement.
Are transaction costs included in the fee on YourSuper?
YourSuper shows a total fee figure on a standard balance for MySuper products. Read the tool's explanatory notes to see which cost lines are included at the time you use it.
Do lower investment fees always mean lower returns?
No. Cost and return are separate. A cheap option can perform well and an expensive one badly, and the reverse. What fees do with certainty is reduce whatever the gross return turns out to be.
Can my fund change investment costs during the year?
Yes. Costs depend partly on actual trading and manager performance, so disclosed figures are updated, usually annually. Check the latest PDS rather than an old copy.
Official sources
- ASIC — rules for disclosing fees and costs, including performance fees and transaction costs
- Moneysmart — super investment options and fees
- ATO — YourSuper — net returns and fees for MySuper products
- APRA — annual performance test and fund-level statistics
