US investment giant Vanguard has entered the Australian superannuation market, launching a low-cost fund that it claims is the cheapest on offer for some Aussies.
Vanguard Super’s MySuper default fund opened up to the public on Friday and charges fees of 0.58 per cent. According to research by Deloitte commissioned by Vanguard, the fund offers the lowest fees on the market for members aged 47 years and under with balances under $50,000.
Super funds generally charge between 0.89 per cent and 1.17 per cent on average depending on your age and super balance, according to research by Canstar.
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Vanguard, which already manages more than $100 billion in funds in Australia, said they want to provide “much needed change” and offer Aussies “simplicity, transparency and a low-cost investment approach”.
“We want to deliver members a low-cost, high-quality super fund that includes a default offer designed to move with them right through life,” Vanguard Australian managing director Daniel Shrimski said.
The fund also offers a unique “lifecycle” feature, which automatically adjusts investments based on the member’s age - becoming more conservative once the member reaches the age of 48, at no extra cost.
Asset allocations will adjust 36 times over the course of the member’s life, Vanguard said, which is more than an industry average of four or five adjustments.
Vanguard will also offer a range of index-based and single sector investment options for members to choose from.
The launch follows new research by Vanguard that found half of Australians don’t know what super fees they pay, and two in five are unsure whether they are with a low cost fund.
“There remains a lot of variety in how superannuation fees are constructed and communicated to members – making it difficult to truly understand how much they are paying each year," Shrimski said.