Super performance and design

The design of your underlying super product, and how it helps your investment performance.

What a difference a year can make

For the 11-month period ending 31 May 2021, many super funds have reported positive momentum with their returns reflecting pre-pandemic levels, and in some cases higher, compared with the 0.6% loss super funds saw for the 2019/20 Financial Year.1

It’s worth pointing out that this performance rebound is mostly thanks to the global response to the pandemic, including government stimulus packages, low interest rates, and vaccine rollouts, all of which have helped boost consumer and business sentiment, and expenditure.

But there is another attribute that impacts your super returns, and it is something that is always there. 

And that is the underlying design of your super.

What do we mean by super ‘design’?

Super funds offer different super products, each with their own set of features detailed in your Product Disclosure Statement (PDS), including things like the investments available, the fee structure, the insurances on offer, and importantly, the investment approach.

  • Some super products are designed so people can personalise their own investments, and have control over how, and where their super is invested.
  • Other super products are designed to be hands-off, or ‘set-and-forget’, and are suitable for those who want their investment strategy managed for them by their super fund.

The design of your super product, or perhaps more specifically how your super is invested, is an important consideration in the face of changing markets, depending on what stage you are in your life, and what level of investment risk you’re willing to take. 

Ask yourself

Does my super fund treat me the same whether I’m 22, or 62, or does it change over time as I move through different stages of my life?

In other words, does my super…

  • maximise growth opportunities in my younger working years?
  • give me the opportunity to recover from market losses over the long term?
  • automatically reduce my exposure to riskier assets as I’m approaching retirement?
  • reduce my investment risk when I’m in retirement, especially if there’s a market downturn?

Whether you choose to personalise your own investments, or have your super fund manage them for you, the design of your super matters.

We are not all one size

80% of Australians have their super in ‘MySuper’ products2. MySuper is designed as a simple, low-cost, and easy-to-compare solution, for those who don’t want to choose their own super fund. MySuper funds are also known as default funds.

Therefore, MySuper products, are commonly referred to as default investment options.

Many MySuper funds have a default investment strategy that is designed to be a single ‘one-size-fits-all’ approach with regards to investment risk. This sees around 60-80% allocated to growth assets, like property and shares, which tend to be riskier, and the remaining across more defensive assets, like cash and fixed interest, which generally carry lower investment risk. 

  • A ‘one-size-fits-all’ means the design does not factor in where a person may be in their life. For example, a 22-year-old and a 62-year-old would have the same level of investment risk, meaning they’d be exposed to the same impacts in times of market downturn. 
  • The difference being, when markets improve, a 22-year-old has more time to recoup losses through rebounding asset prices than a 62-year-old does, who will more likely experience a permanent reduction in their super balance.

Age-based investment options 

In 2007, we designed a super product offering that disrupted the ‘one-size-fits-all’ approach, called ‘Lifestage investing’. 

Instead of one default investment option, Lifestage investing provides multiple age-based options for our MySuper members as they move through different life stages, with investment risk determined by which decade they were born, from the 2000s through to the 1940s.

Born in the 2000s, 1990s, 1980s, 1970s

‘The working years’

  • Focus on growth assets to help grow super balances.

  • Around 85% invested in growth assets.

Born in the 1960s

‘Transitioning to retirement’

  • Gradual increase in defensive assets to help protect savings from volatility.

  • Around 60% invested in growth assets.

Born in the 1950s or 1940s

‘Retirement’

  • Steady focus on defensive assets to help keep pace with inflation and provide a retirement income.

  • Around 30%–37% invested in growth assets.

Lifestage investing in action

Super contributions from members born in the same decade are invested across different asset classes that have an age-based risk profile for those members.

Here’s an example of the BT Super 1980s BT Lifestage investment option in action. 

  • In January 2020, our members in the 1980s BT Lifestage investment option were benefitting from returns close to 17.8%^ over the previous 12-month period – given the fund’s higher allocation to growth assets.
  • In March 2020, returns fell to around -8.2%^ on a 12-month basis, resulting from the COVID-19 pandemic.
  • And in May 2021, returns were once again up around 23.02%* for the 11-month (financial year-to-date) period, as markets recovered from the impact of COVID-19 and their fund was investing at lower prices when the markets had dipped.

When markets dip, people born in the 1980s have the added advantage of having around 25–35 years left to make up for any lost ground. If someone born in the 1950s had experienced the same losses, depending on their age (currently 62–71 years), they would not have the same investment timeframe to recoup losses.

Here’s an example of the BT Super 1950s BT Lifestage investment option in action. 

  • In January 2020, these were benefitting from returns close to 9.7%^ over the previous 12-month period – given the fund’s higher allocation to defensive assets in the form of bonds and cash.
  • In March 2020, returns fell to around -2.2%^ on a 12-month basis, resulting from the COVID-19 pandemic.
  • And in May 2021, returns were once again up around 9.05%* for the 11-month (financial year-to-date) period, as their fund was able to offer protection in the form of defensive assets, yet still investing in growth assets albeit at a lower percentage.

The 1950s BT Lifestage investment option helped to protect member account balances during the market falls in 2020, by taking less investment risk at this stage of their working life, and helped recover some growth when markets began to recover over 2021.

Year to date returns across all our Lifestage investment options have exceeded their Trustee objectives over this period, delivering strong returns. 

Our Lifestage super investing adapts as you move through stages of your life, with higher returns when you’re younger and reduced risk closer to retirement.

Super investments – taking a long-term view

Are there more market falls to come? Nobody really knows what the future holds, and 2020 was just one example of around four or five more severe market volatility events that we’re likely to see in our lifetime.

History teaches us that market volatility is expected and that the value of different investments will always go up and down. As a result, returns will always fluctuate, and importantly, after markets bottom out, they generally resume a long-term upwards trend. Sticking the course of a long-term investment like super, is worth considering. 

Take a look at the historic Australian All Ords Bull & Bear Market (PDF) (see page two) from 1940 through to 31 March 2021. 

It’s also important to spread your investment risk, and not put all your eggs into one basket as they say, so that your risk is minimised, and returns are generated at the same time.

So, when you understand the design of your super product, you’re in a better position to take a longer-term view with your super, and understand that market volatility in conjunction with age-based investing, does not always have to mean permanent loss.

See the full allocation of growth and defensive assets in the Lifestage investment option

Need more help?

1 Super fund performance: Monthly returns to April 2021, SuperGuide, 18 May 2021, accessed 27 May 2021.

2 Is it time to change your super investment option? SuperGuide, 1 January 2020, accessed 27 May 2021.

^ Performance figures are calculated in accordance with the APRA reporting standards. Total returns are calculated using withdrawal prices appropriate for the month end and take into account all fees and costs, including the $6.50 per month administration fee, and earnings tax up to a maximum of 15%. Additional costs apply and vary by investment option. Refer to the Product Disclosure Statement (PDS) for details.

* Performance figures are calculated in accordance with the APRA reporting standards. Total returns are calculated using withdrawal prices appropriate for the month end and take into account all fees and costs, including the $9.00 per month administration fee, and earning tax to a maximum of 15%. Additional costs apply and vary by investment option. Refer to the Product Disclosure Statement (PDS) for details. 

This information is current as at 8 June 2021.

This article was prepared by BT Funds Management Limited ABN 63 002 916 458 (BTFM) and is current as at 8 June 2021. BTFM is the trustee of the following products:

(a) BT Super for Life, BT Super for Life Westpac Group Plan and BT Super part of the superannuation fund Retirement Wrap ABN 39 827 542 991; and
(b) Asgard Employee Super Account part of the superannuation fund, the Asgard Independence Plan Division Two ABN 90 194 410 365.

This information has been prepared without taking account of your personal objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This document provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.  

Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investment held in superannuation. The Government has set caps on the amount of money that you can add to superannuation each year on both a concessional and non-concessional tax basis.  There will be tax consequences if you breach these caps.  For more detail, speak with a financial adviser or visit the ATO website. BT cannot give tax advice. Any tax considerations outlined in this article are general statements, based on an interpretation of the current tax law, and do not constitute tax advice. The tax implications of superannuation can impact individual situations differently and you should seek specific tax advice from a registered tax agent or registered tax (financial) adviser.

Read the Product Disclosure Statement (PDS) to see if these products are right for you by visiting bt.com.au or asgard.com.au. Past performance is not a reliable indication of future performance. All examples are illustrative only. Your portfolio value and performance will depend on the investment options you have selected and the time over which they are invested. 

BTFM is a member of the Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian Credit Licence 233714 (Westpac) group of companies. An investment in these products is not an investment in, deposit with or any other liability of Westpac, any division of Westpac or any other company in the Westpac Group. Westpac and its related entities do not stand behind or otherwise guarantee the capital value or investment performance of the products or any related assets of the products.