Why 95% of Funds Underperform – And What That Means for Your Super

The sobering reality of long-term fund performance

If you’re relying on a retail or industry super fund to grow your retirement wealth, recent data should prompt you to take a closer look. According to Rainmaker Information, over a 15-year period, a staggering 95% of international equities managed funds underperformed their benchmarks.

And it doesn’t get much better in shorter timeframes:

• 83% of funds underperformed over three years

• 91% underperformed over five years

• 95% underperformed over 15 years

  
  

This consistent failure to meet benchmarks paints a clear picture: the majority of actively managed funds struggle to justify their fees and strategies—especially over the long haul.

Why does this matter for superannuation?

For most Australians, superannuation is the single biggest investment vehicle they’ll ever own. Yet much of it is parked in default investment options within retail and industry super funds—often invested in actively managed portfolios that are:

• Costly due to embedded management fees

• Opaque in terms of asset allocation and strategy

• Benchmark-trailing, as shown by the Rainmaker data

  
  

The compounding effect of long-term underperformance—even by just 1–2% per year—can result in tens or hundreds of thousands of dollars less at retirement.

Key Insight:

• After 15 years, an 8% return grows $100,000 to over $317,000

• A 6% return grows it to just around $240,000

• That’s a difference of nearly $77,000, purely due to performance gaps

*Note - this is an indicative example only - demonstrating the impact of comparative investment underperformance over time. Actual results may vary.

The Self Managed Super Fund alternative: greater control, targeted returns

Self-Managed Super Funds (SMSFs) offer an alternative path. With an SMSF, investors can:

• Avoid high-fee underperforming managed funds

• Directly invest in high-performing asset classes like property

• Customise asset allocation to suit their strategy and risk tolerance

  
  

This doesn't guarantee better returns—but it does give investors more control and transparency, and removes reliance on external fund managers who may not consistently deliver.

Final thoughts: Don’t let your super coast on autopilot

If you're in your 40s, 50s or nearing retirement, you can't afford another decade of benchmark-lagging performance. The difference between being in a top-quartile strategy versus a bottom-quartile one could mean retiring five or ten years earlier—or later.

If you're concerned your current super fund isn’t delivering, now might be the time to explore whether an SMSF strategy aligned with property investment could offer a more secure and high-growth path to retirement. Contact us for a free consultation today.