Hi Scott,
A while back you wrote about Vanguard Super’s upcoming entry onto the Australian scene. I was hoping you could share your thoughts on their performance so far. All the comparison websites are unable to give more than one year’s worth of data, but that one year is looking pretty impressive, and combined with the low fees it’s hard to ignore. Is this enough information to confidently make the switch?
Linda
Hi Linda,
I’ll be honest, when Vanguard Super launched back in November 2022, I considered switching. After all, I was sure the revolution had arrived: finally someone was going to kick down the door of the $30-billion-a-year super fee racket!
Unfortunately, it’s been less ‘bust the door down’ and more a polite ‘tappity tap tap’: “Oh, excuse me … mind if we join in?”
You see, the truth is that most big funds – AustralianSuper, Hostplus, Cbus, etc – are still partying like it’s 1999: one-size-fits-all aggressive portfolios, bloated fees, and active management that’s basically professional dart-throwing which ultimately leads to much lower returns than index funds over the long term.
The big funds ignore this, because admitting it would mean firing most of their investment manager mates, cancelling the ‘research’ trips to Switzerland, and actually competing on fees. And where’s the fun in that?!
Yet here’s where Vanguard falls down: the fees. It charges 0.58%.
Low? Sure.
Lowest? Not even close.
Ironically, you can get cheaper index options from the same big funds that Vanguard set out to disrupt.
But I’ll let you into a secret: most of the big funds don’t promote their index offerings. Instead, they make you go digging through their investment menus like you’re ordering off the secret Macca’s menu. My guess is they only added them to stop their smart investors jumping ship to Vanguard.
So, yes, I like Vanguard. I own their ETFs. But I haven’t switched my super, because I can get the same index exposure, for less, from the dinosaurs they were meant to replace.
Scott