Getting value for your super fees
We have been providing ethical investment services for 33 years. Our investment decisions are guided by the Australian Ethical Charter and its 23 principles which have remained unchanged since 1986. We have an in-house team of ethics analysts who assess new and existing investments against the Charter. If potential investments satisfy the Charter and meet our Ethical Criteria, we invest; if ethical problems are identified in an existing investment we may decide to advocate for change or simply divest. On the other hand, we actively seek out companies that have a positive impact on the planet, people and animals.
If a company passes our ethical screening process it’s over to our in-house investment team who have a combined 100 years of experience. Australian Ethical chief investment officer David Macri has recently clocked up 10 years in his role and Andy Gracey has been a portfolio manager for over a decade. David and Andy lead a team of investment professionals who construct portfolios with the aim of producing long-term returns. Over the years we have proven that a strong ethical approach to investing does not detract from performance. In the 10 years to 29 February 2020 the Australian Shares option returned 10.1% net of fees and taxes and the Balanced (accumulation) option returned 6.9%. It’s worth noting that the Australian Shares option has achieved this return with a much lower level of risk than most of our competitors over the past three years. You can see the performance of all of our investment options here.
In addition to our unique ethical investment process, our portfolios are also actively managed by our investment team. The exception is our International Shares option, which uses an index-tracking approach (although our ethical screening process always applies). In summary, Australian Ethical takes a hands-on, deep green approach to ethical investing by using an in-house team of experts. We don’t cut corners when it comes to ethics, and that is part of the reason our investment fees are slightly higher than our competitors.
What are our fees?
As we have grown in scale throughout the years we have steadily reduced our fees. In our latest fee reduction on 1 October 2020 we further reduced the fee on our Defensive option (super and pension) from 0.40% to 0.20%. You can find all of our current super and pension fees on our website. However, investment fees are only part of the story – there are also administration fees to consider. The great news for all our members is that from 1 April 2020 we are reducing our administration fee across all super and pension options from 0.41% to 0.29%. Let’s take a look at the total cost of a $50,000 account invested in our Balanced option as at 1 April 2020.
- First, there’s an investment fee of 0.64% per year, which equates to $320 for a $50,000 balance. This fee covers the work done by the investment team and the ethics team, as well as costs incurred for things like custody, research and asset servicing.
- Next, there is an administration fee of $97 per year plus an additional 0.29% ($145) of your $50,000 balance. This fee pays for administration and operating costs including trustee services, account management, auditing services, marketing and regulatory compliance.
- Finally, there are indirect costs of 0.11% of your $50,000 balance which equates to $55 per year. These indirect costs relate to the specialist asset managers we use for property and alternative investments.
When you add that up, the total fee for $50,000 invested in the Australian Ethical Balanced (accumulation) option is $617 per year. You can find more information about our fees as well as a link to our Product Disclosure Statement here.
How do we compare?
Fees are certainly an important factor when choosing super funds but they are not the only thing to consider. You should also compare things like the ethical screening process (if there is one), the investment process, the range of investment options, transparency (can you see what you’re invested in?) and advocacy work. It’s important to remember that fees and costs are also about the service you receive and the level of engagement of your fund managers. The team at Australian Ethical works hard every day to ensure your money is changing the world for the better as well as achieving competitive long-term returns.
This information is general information only and does not take account of your individual investment objectives, financial situation or needs. Before acting on it, consider seeking independent financial advice.