What are the returns like?
Ok let’s get this out of the way. Past performance is not an indicator of future performance. We can’t see the future. If we could, we probably wouldn’t need to invest to save it.
But to date our returns have been pretty good. We’ve had some standout years, like 2019-20 when we outperformed almost every balanced super fund in Australia^ . But we’re also realists. Any super owner should expect their fund to have positive and negative returns over time. Why? Markets go up and down all the time and no one is immune to that. If you want to see our returns in detail, here’s a handy link.
^ Based on data obtained from ‘SuperRatings Fund Crediting Rate Survey - Balanced (60-76)’ over 12 months to 30 June 2020.
What are the fees like?
Let’s talk about fees! There are two main types of fees for super - investment and administration. The administration fee is a fixed $60 per year for all our options. If your balance is less than $6000, you won’t have to pay this one.
Our investment fees vary depending on the option you choose. The Balanced Index option is low cost for more fee conscious customers at 0.87%. Our Balanced Impact and Renewables Plus Growth options have higher fees (1.47% and 1.48% respectively).
So what sort of extra value are you getting for that? Each of those options targets specific types of investments in line with its Investment Strategy, which means we have to find and include additional types of investments that create climate solutions (e.g. solar and wind technology) or social improvement (e.g. disability housing). So not only are there more investments than the low fee option, they’re even more focussed our mission to create a future free from climate change and inequality.
You can definitely find funds with lower fees, but we’re confident they won’t be anywhere near as ethical or impactful as Future Super.
What does super have to do with the climate?
Quite a bit actually. We often hear people say that reducing your personal impact doesn’t matter because big businesses are the ones driving climate change and polluting the planet. The thing is, those people often don’t realise that their super is invested in a lot of those companies. But if all of Australia’s super was invested with Future Super’s ethical screens, here’s what happens: the entire world would be halfway to the carbon reduction target set out in the Paris Agreement to keep warming below 1.5-2 degrees (1-2bn tC02e per year)^.
That’s the power of superannuation. It’s one of the world’s largest privately owned wealth resources and it’s literally in your hands.
^ You can read more in Future Super’s 2020 Carbon Transparency Report
Will I lose money or make less by investing ethically?
There is no evidence to suggest investing ethically makes less money. In fact there’s a truckload of evidence that says the exact opposite. *Cue truck reversing noise as we dump some info on you*.
Responsible investing has been shown to make more money in the short, medium and long term . So why doesn’t everyone do it? Well, it’s actually pretty hard to do. The world isn’t perfect and neither are companies, so constructing rules for what’s considered ethical and what isn’t can be complex.
But what hasn’t been taken into consideration is that fossil fuel companies cannot exist in a world where we want to keep global warming below 2 degrees.
Fossil fuel companies have detracted from super fund returns enormously. Those companies won’t exist in a 2 degree world.
We think fossil fuels are overvalued because we cannot afford to burn all the fossil fuels available if we’re to limit the effects of climate change.
The basic premise we use is that any activity that is harmful to people or the planet is a long-term risk to an investment’s profitability. Some companies in this category might be good investments now, some probably aren’t. We remove them all because, over time, we believe that risk turns into poor performance more often than not. That leaves your money open to invest in more things that will protect your future from the threat of climate change.
What does Future Super actually invest in?
If we’re being cheeky, we’d say we invest in your future. But that’s probably not what you meant. It’s actually a pretty clever question because believe it or not, the majority of super funds won’t tell you what they invest in. That’s not the case for Future Super.
The list of things Future Super invests in is constantly evolving and, just like the fees, it depends on which investment option you choose. Across the fund, we hold investments in shares, fixed interest loans, debt, and in unlisted assets too (like solar farms or disability housing). We try to keep the list of companies pretty diverse so no single investment affects your super balance too much. Feeling nerdy? You can find details on every investment here.
I’m already with an ethical option. Why should I change? How is Future Super different?
We think it’s great that you’ve already chosen an ethical or sustainable option. There are a few good ones, but there’s two things you should know.
First, there’s no regulation on what is and isn’t ethical or sustainable super. It’s not uncommon for those options to include coal companies, gambling businesses and weapons manufacturers as investments. Second, there are different approaches to ethical investing. Future Super chooses not to invest in companies that we think are bad for people or the planet. This is called divestment. Others continue to invest some of their portfolio in such companies so that they have power as a shareholder to influence them. This is called engagement. While Future Super does engage with companies, we think divestment is a more efficient and effective strategy to achieve change. Bottom line is, you can’t engage a coal company out of mining coal. That’s not how the world works.
Check out your super option and see what sort of stuff you’re invested in while you wait for change.
What do you think of my current super? Are they really that bad?
We think every super fund has room to improve the way they handle your money, including us. Hopefully they’re making you money, like all super funds should.
But here’s what we think is gross. If even 1% of Australia’s superannuation is invested in fossil fuels (hint: it’s definitely more), that’s $31 billion propping up an industry that’s risking your future. There are very few super funds that don’t invest in fossil fuels. In a world where scientists say we have less than 10 years to cut global emissions by half, that’s just not good enough. So we don’t just think your super fund is bad. We think our whole industry is a few sandwiches short of the picnic basket.
We created Future Super because no one was doing what we’re doing. So, if you want a fund that will act quickly and decisively to protect your future, Future Super stands out from the crowd.
What does the Barefoot Investor think of Future Super?
We think the Barefoot Investor is a pretty cool dude. He makes money easier to understand for so many people and that’s a tick in our books. But we have some philosophical differences. Scott says that fees are the most important thing but doesn’t say much about the future. In many ways he assumes that the money you investing won’t affect the world you live in. But money doesn’t exist in a vacuum.
We think it’s important to align the way you invest with your values because the future isn’t just measured in dollars, it’s measured in celsius. Future Super invests on behalf of members who care deeply about climate change, and we know that as one of the largest assets you have, super is the best opportunity for many to create meaningful change. The Barefoot Investor is all about saving money but his style of investing won’t give you more than that. Future Super is about saving both money and your future.
Why does being fossil fuel free matter?
It doesn’t just protect the planet. It protects your money as well. Did you know that Australian fossil fuel investments nearly halved in value over the last decade? As energy sources move away from fossil fuels, the value of those investments will continue to decline, until they aren’t worth the paper they’re printed on. This is called a stranded asset - an investment so bad it’s basically unsellable. It’s a one way ticket to losing your super.
We know that not everyone cares about climate change as much as we do. If you don’t think that looking after the future of our planet is important, then think about your own future when you consider if you want fossil fuels in your super.
How can I compare returns with my current fund?
Commercially-run super fund comparison websites exist, but many of them only include the biggest funds, which is under 10% of all super funds. So keep heading back to our performance and returns page to check Future Super against info you find on the internet.
It’s also important to remember that super isn’t like for like and options that appear similar can hold very different investments. So while one might perform better one day, another can perform better the next.
What should I look at when comparing super funds?
When comparing super funds the most common things people are told to look at are fees and long-term returns. But to get the full picture of what’s happening with your money, we think there are a few other signals you should look for.
A responsible fund should disclose all their investments, yet only 12 percent do. If they don’t, it’s easy to call them and ask if they invest in fossil fuels. If the fund is fully transparent and doesn’t invest in fossil fuels, they may provide data on the emissions produced by their investments. We think all these things should be easily accessible and Future Super provides all this information on our website.