Your super fund doesn’t just hold your money in a bank account — it invests it in a mix of assets on your behalf. Most funds offer a range of investment options, from cautious strategies holding mostly cash and bonds, to aggressive strategies holding mostly shares and property. Your choice of investment option is one of the most impactful decisions you will make in managing your super.
The default option — where your money goes if you don’t actively choose — is typically a balanced or MySuper option. But this may not be the right option for your age, risk tolerance, or retirement timeline.
How Super Investment Options Work
When contributions arrive in your super account, they are invested according to your chosen investment option. Each option holds a different mix of asset classes — the fundamental categories of investment that have distinct risk and return characteristics.
The Two Broad Asset Classes
Growth assets — higher expected long-term returns, higher short-term volatility:
- Australian shares (ASX-listed companies)
- International shares (global equity markets)
- Property (direct and listed real estate)
- Infrastructure (airports, toll roads, utilities)
- Private equity
Defensive assets — lower expected returns, lower volatility, more stable:
- Australian fixed interest (government and corporate bonds)
- International fixed interest
- Cash
An investment option’s character is defined by the proportion of growth vs defensive assets it holds.
Standard Investment Options
Most super funds offer a spectrum of options, typically labelled as follows. The allocations below are typical industry ranges — the exact split varies by fund and is disclosed in each fund’s Product Disclosure Statement (PDS).
Conservative
- Growth / Defensive split: ~30% growth / 70% defensive
- Expected return (long-run): CPI + 1–2% per year
- Risk: Low — unlikely to experience a negative year, but lower long-term growth
- Who it may suit: Members within 1–3 years of needing access to their money, or those with a very low tolerance for volatility
Balanced
- Growth / Defensive split: ~50–60% growth / 40–50% defensive
- Expected return: CPI + 2–3% per year
- Risk: Medium — may experience negative returns in some years (historically roughly 1 in 5 years)
- Who it may suit: Members with a medium time horizon (10–15 years to retirement) or moderate risk tolerance
Growth
- Growth / Defensive split: ~70–80% growth / 20–30% defensive
- Expected return: CPI + 3–4% per year
- Risk: Medium-High — more frequent and larger negative return years possible
- Who it may suit: Members with a longer time horizon (15+ years to retirement) comfortable with volatility
High Growth
- Growth / Defensive split: ~90–100% growth / 0–10% defensive
- Expected return: CPI + 4–5% per year
- Risk: High — can experience significant losses in down markets
- Who it may suit: Members early in their career with decades until retirement, who can ride out market cycles
Cash
- Growth / Defensive split: 0% growth / 100% defensive (cash and short-term deposits)
- Expected return: Close to the RBA cash rate
- Risk: Very low — no risk of loss, but returns often don’t keep pace with inflation
- Who it may suit: Members in or very close to retirement who need certainty, or those with very specific short-term liquidity needs
The MySuper Default Option
If you don’t choose an investment option when you join a fund, your contributions go into the fund’s MySuper product — the government-mandated default. All funds that accept employer default contributions must offer a MySuper product.
MySuper products must meet minimum requirements set by APRA including fee caps and basic insurance. They are typically a balanced or lifecycle option.
Lifecycle MySuper options automatically shift your asset allocation as you age — holding more growth assets when you’re young, gradually moving to more defensive assets as you approach retirement. This removes the need for members to actively manage their option over time.
Single diversified MySuper options hold a fixed allocation regardless of age — typically in the balanced/growth range.
For more detail, see MySuper vs Choice Product Explained.
The Long-Term Impact of Your Choice
The difference in long-term outcomes between investment options is significant. Consider the impact on a $50,000 super balance over 30 years, using simplified assumptions:
| Option | Assumed Annual Return | Balance After 30 Years |
|---|---|---|
| Cash | 3.5% | ~$140,000 |
| Conservative | 5.0% | ~$216,000 |
| Balanced | 6.5% | ~$324,000 |
| Growth | 7.5% | ~$437,000 |
| High Growth | 8.5% | ~$574,000 |
Illustrative only — assumes constant annual returns and no fees or contributions. Actual returns will vary. Past performance is not a reliable indicator of future performance.
The trade-off is volatility. High growth options may lose 20–30% in a severe market downturn (such as the GFC or COVID crash) before recovering. Members who panic and switch to cash during downturns may lock in losses permanently.
Sector and Index Options
Beyond the standard diversified options, many funds offer more specialised choices:
- Australian shares — 100% exposure to ASX-listed companies
- International shares — 100% global equity exposure, often including or excluding hedging
- Property — listed real estate investment trusts (A-REITs) and/or direct property
- Index options — passively track a market index (e.g. ASX 200, MSCI World) with lower fees than actively managed options
- Ethical/ESG options — exclude companies involved in industries like fossil fuels, tobacco, weapons, or gambling. See our guide on ethical super funds for more
These sector options are used by more engaged members who want to customise their exposure, or who prefer index-based investing over active management.
How to Choose Your Investment Option
The right option depends on your time horizon, risk tolerance, and personal circumstances — not your short-term view on markets.
General Principles
- Time horizon is the primary driver. Someone with 30 years to retirement can ride out multiple market cycles and typically benefits from more growth exposure. Someone retiring in 2 years cannot afford a 30% portfolio drop.
- Don’t switch based on recent performance. Switching to high growth after a bull market, or to cash after a crash, is a common and costly mistake. You buy high and sell low.
- Fees matter as much as returns. A higher-returning option with higher fees may underperform a lower-returning, lower-fee option over time.
- Your investment option affects insurance. Some fund insurance products are linked to your investment option — review your insurance when switching.
For a full step-by-step approach, see How to Choose a Super Fund and How to Change Your Super Investment Option.
Frequently Asked Questions
Can I split my super across multiple investment options? Yes. Most funds allow you to split your balance across multiple options — for example, 70% in high growth and 30% in cash. You can also direct new contributions to a different option from your existing balance. Check your fund’s portal or PDS for the specific splitting rules.
How often can I change my investment option? Most funds allow switches at any time, often processed within a few business days. Some funds limit the number of free switches per year. Check your fund’s PDS for any switch frequency restrictions or fees.
Does changing investment options trigger capital gains tax? No. Switching investment options within a super fund is not a CGT event for you personally — all investments are held by the trustee, not by individual members. Any capital gains within the fund are managed by the trustee and factored into unit prices.
If I have multiple super funds, do they need to be in the same option? No. Each fund is independent. Before consolidating super funds, check the investment options, fees, and insurance in each fund. See our guide on how to consolidate super for more.
What happens to my investment option during a market crash? The unit price of your chosen option falls in line with the underlying asset values. Your number of units does not change — only the price per unit. If you switch to a defensive option after a crash, you sell units at the lower price and may miss the recovery. Historical data shows that markets have recovered from every major downturn over time — though past performance does not guarantee future results.
For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.