INVESTING

Super consistent: First State Super

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This week Money asks Rainmaker where to invest, and its pick is the First State Super MySuper option.

First State Super is the fourth largest super fund in Australia and one of the cheapest. It is a not-for-profit fund, and since its 2011 merger with the Victorian-based Health Super, it is open to anyone who wants to join.

It has one of the largest shopfront networks of any not-for-profit super fund and is highly active in working with members through initiatives such as its Student Club and Women in Super program. First State Super is run by a 12-person board that is led by an independent chairperson who is supported by member- and employer-sponsored representatives from education, nursing and police unions, healthcare providers, business experts and financiers, human rights advocates and academics.

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What it offers

First State Super offers 12 investment options across its workplace, personal and retirement divisions, five of which are diversified and seven of which are asset-class specific. Its MySuper option, which makes up 80% of the overall fund, is a lifecycle option mix where members are placed into the diversified option until age 60, after which they are placed into the slightly more conservative balanced option. Reflecting First State Super's long-time commitment to portfolio-wide investment sustainability principles, such as through active proxy voting at company annual general meetings, it offers two dedicated "socially responsible" investment choices.

First State Super doesn't offer direct share trading but it does provide highly tailored financial advice in person, over the phone and online. This looks set to expand further following its acquisition in May of the State Plus financial advice network. On top of this, members can also buy sharply priced life, TPD and income protection insurance, with cover ranging up to $1 million.

Independent commentary

A member who invested $10,000 in their First State Super account 10 years ago would now have $16,050 compared with someone who invested in an average fund, who would have $15,900 - almost 1% less. The closeness in these performance outcomes demonstrates that while First State Super is an above-median fund it is nevertheless wary of taking on too much risk. For example, in the past decade its 10-year performance has matched the market benchmark (it beat the benchmark five times). This consistency, combined with low fees, reasonable range of choices and extra features, is why First State Super is one of Australia's most reliable super funds and a regular category winner at the annual SelectingSuper fund of the year awards.

Key fund data

Size $50 billion; 750,000 members   5-year performance 7.21%pa after fees as at March 2016
SelectingSuper rating AAA   Investment choices 12
Fees 0.65% in the MySuper option   Insurance choices 168 depending on occupation group

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Alex Dunnin is director of research at Rainmaker Information, publisher of Money magazine, Financial Standard and Selecting Super.
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