Why I’m Glad I Got Rid of My Super Bank Fund

At the time of this conversation in 2012, my industry fund, Media Super, had just gone through a terrible period with a series of poor returns due to the global financial crisis. It had delivered negative 0.43% in the year to June 2012, negative 0.67% per annum for five years and positive 4.93% per annum for 10 years.

I followed the wise advice of a colleague and held off writing about my SMSF until the board started seeing some decent results.

The genesis of the SMSF was not just about increasing profits. My partner and I wanted to pool our financial assets, be prepared for retirement, have access to products available only to sophisticated investors and seek professional financial advice for the first time.

The first SMSF article appeared in 2019 under the Chook Super Fund banner. It revealed consistently strong performance against benchmark indices and the Media Super default growth option.

Now, six years after that first article, I can say there was no ominous day of reckoning. In fact, despite all the volatility in financial markets caused by COVID-19, the worsening geopolitical situation, and the wars in Ukraine and the Middle East, the fund has continued to deliver solid returns.

In the year to 30 June, my SMSF returned 14.21 per cent (net after fees) compared with 8.35 per cent for the default Media Super growth fund. Over the past 10 years, my SMSF’s net annualised return was 9.37 per cent compared with 7.73 per cent for the default Media Super growth option.

Thanks to the benefits of compound interest, the difference in performance of around 1.64 per cent a year over a decade means I have significantly more in savings than if I had stayed with Media Super.

Seeking professional advice from Charlie Viola of Pitcher Partners Wealth was a wise move. It resulted in building an investment portfolio based on the following principle – have a long-term strategy of owning good quality companies that generate income throughout the cycle.

Over the past decade, Viola has encouraged trustees to diversify into defensive alternative investments, real estate, private equity and high-yield fixed income securities.

He says the fund’s outstanding performance in 2024 was in global equities, with a return of 27%, outperforming the MSCI index by about 7%.

“We maintain a fairly consistent neutral to positive position in global equities, with an overweight position in AI and technology,” he says.

“Our large position in Loftus Peak helped a lot, as it delivered returns of around 41 per cent over the period. And our decision to hold Apple, Alphabet and Toyota helped, as they all delivered above-market returns.

“One of the more speculative positions in Iress Energy also rebounded strongly as its focus began to shift toward AI data analytics. It’s finally looking like a good investment for the fund as people there get their infrastructure plans in place.” Iress is down 30 percent since June 30.

Viola says the main reason SMSF beat Media Super is because “we were basically trying to generate a return with a growth asset that was popular despite rising interest rates and all the other factors.”

“Even our fixed-rate exposure is backed by real assets, which I think is a better way to invest money than traditional bonds, where yields are low, liquidity is poor and spreads are set by brokers who charge fees,” he says.

It should be noted that the asset allocation range of Media Super’s default growth option could accommodate my SMSF’s asset allocation. Furthermore, Media Super has upped its game since 2012 by investing a quarter of the fund in infrastructure and alternatives.

Another reason I am glad I left Media Super is that I do not have to spend my super savings on sponsorship projects with the CFMEU and Master Builders Association. Our SMSF also does not have a large marketing budget.

In 2022, Media Super became part of the $94 billion Cbus Super empire, placing fund members in the orbit of Cbus’s difficult conflicts of interest in the commercial property sector.

I’m glad I no longer have to use a management model that has trouble attracting new talent.

Cbus chairman Wayne Swan has sought to appoint new directors, but his decision to re-admit former CFMEU national secretary Dave Noonan to the Cbus board to represent the CFMEU breaches all principles of good governance.

Noonan served as a director of Cbus from 2006 to December 2021. During that 15-year period, he pointedly ignored the ASX’s corporate governance rule that directors should not serve on a board for more than 10 years.

Even 10 years is too long to serve on a board, according to respected business leader Catherine Livingstone, who was chair of Telstra and Commonwealth Bank of Australia.

In March, at the Australian Institute of Company Directors’ annual summit in Melbourne, she said it was time to talk about moving away from board terms of nine to 20 years and instead normalise terms of six years or less.

Since returning to the Cbus board, Noonan has again served on the board of Cbus Property, one of Australia’s largest property development companies.

A Cbus spokesperson said: “Under the collaborative model, the Cbus board consists of two independent directors, six directors appointed by Master Builders Australia and six union-appointed directorships. Cbus directors have a duty to act in the best financial interests of our members.”

Cbus is at least aware of the potential conflict between the interests of the property division and the trust, as evidenced by the fact that all decisions by Cbus Property must receive the support of a majority of the independent directors of the company in question.

Cbus Property has seven directors, three of whom are independent, meaning two directors have the power to decide what happens if a difficult issue comes to a vote.

Swan would no doubt argue that Noonan’s appointment was not cronyism because he is such a good director. As he said in a 2022 press release, “Dave takes seriously the duty of directors to question and challenge.”

I hold no ill will towards Media Super and I am impressed with the results the company has achieved over the past decade.

However, I believe that its members, like all pension fund members, should seek professional financial advice to see whether it would be more beneficial for them to engage in managing their own money and achieve above-average returns in the industry.

Of course, such advice assumes that the financial adviser referred by the industry fund representative would be inclined to recommend that you leave the industry fund and set up an SMSF.