ESG super options coming at a cost

Superannuation fund members investing with a conscience may be losing retirement savings as a result, with sustainable options often coming at the cost of higher fees and lower returns.

The median performance of sustainable options is lower than an index constructed by SuperRatings of traditional balanced funds, as well as having higher median fees, according to data from the research house.

There are however, some sustainable funds that outperform the market, with offerings by HESTA, VicSuper, AustralianSuper, WA Super and UniSuper all delivering strong returns at competitive fees, as shown in the table below.

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Of course, it should be noted that not all sustainable options are created equal. While some simply apply a screen on certain industries, other perform in-depth analysis of individual companies, which obviously comes at a cost.

SuperRatings acknowledged that “this makes it hard to provide a definitive ranking of sustainable fund performance”, with its executive director, Kirby Rappell, saying that: “When considering sustainable alternatives, it is important to look at each individual fund’s mandate, their process for investing sustainably, and of course the industries and businesses they do and do not invest in.”

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