This guide explains general concepts for educational purposes. It is not financial, tax or legal advice, or a recommendation to buy, sell, hold or change a financial product or strategy. It does not take into account your objectives, financial situation or needs. Rules, caps, thresholds and product terms can change. Check the current official information and obtain advice appropriate to your circumstances before making a financial decision.
The fund type is only the starting point
Labels such as industry or retail fund describe aspects of how a fund is structured, but they do not tell you whether the fund is right for you. Fees, investment options, insurance, service and retirement-income features vary within each category.
- Industry funds
- Retail funds
- Public-sector funds
- Corporate funds
- Self-managed super funds
Comparing account features
A useful comparison considers the investments you require, the total cost of the account, insurance terms, beneficiary options, administration and the consequences of changing funds.
Past performance should not be the sole basis for a decision. A fund that suits one person may be unsuitable for another.
Account consolidation
Combining accounts can simplify administration and reduce duplication, but closing an account can cancel insurance or other benefits that cannot be reinstated on the same terms.
Membership and the way benefits are calculated
Retail and industry funds commonly offer accumulation accounts, where contributions and investment returns build an individual balance. Public-sector and corporate arrangements may have membership restrictions. Some offer defined benefits, where a formula involving factors such as salary and service determines benefits instead of a balance alone.
These arrangements are not interchangeable. A comparison of a defined benefit with an accumulation account involves the benefit formula, preservation rules and available choices, as well as the investment and administration features. The fund's governing documents explain the specific arrangement.
Investment choice and account features
An investment option is a choice within a fund. A single fund may offer diversified portfolios, individual asset classes or more extensive investment menus. Two options called balanced can have different underlying allocations, so the label does not establish that their risk or performance is directly comparable.
The fund also supplies account administration, insurance options and, in many cases, retirement income products. An SMSF changes the operating structure because its members generally act as trustees or directors of the corporate trustee. The appropriate comparison therefore covers how the account will be managed and used over time, not simply its category.