The two main types of Australian super funds are industry funds and retail funds. Understanding the differences helps you evaluate whether your current fund is right for you — or whether switching makes sense.
What Is an Industry Super Fund?
Industry funds are profit-to-member funds originally established for specific industries or sectors. Surpluses are reinvested in the fund for members’ benefit — there are no external shareholders receiving dividends.
Examples: AustralianSuper, Hostplus, Cbus, HESTA, Aware Super, Australian Retirement Trust, UniSuper, REST
What Is a Retail Super Fund?
Retail funds are for-profit funds run by financial services companies. Profits go to shareholders (e.g., the parent bank or insurance company). They are generally sold through financial advisers and employer arrangements.
Examples: Colonial First State (FirstChoice), MLC, AMP Super, BT Super, Mercer Super
Key Differences
| Feature | Industry Funds | Retail Funds |
|---|---|---|
| Ownership | Profit-to-member (no shareholders) | For-profit (shareholder owned) |
| Typical fees | Lower — 0.5–1.0% total | Higher — often 1.0–2.5% total |
| Investment options | Limited to moderate (20–40 options) | Very broad (hundreds of options, managed funds) |
| Default performance | Strong — median industry fund consistently outperforms median retail | Below industry median on average |
| Insurance | Good default cover; some funds offer own-occupation TPD | Variable; some retail funds offer higher cover amounts |
| Adviser access | Limited in-house advice | Often bundled with financial adviser access |
| Accessibility | Online-first; direct member management | Often through broker or adviser |
Performance Comparison — The Data
APRA Annual Superannuation Performance Test and SuperRatings data consistently shows that the median industry fund has outperformed the median retail fund over 5, 10, and 15-year periods.
The 2023 APRA performance test found that:
- 96 options failed the test
- The majority of failures were in retail and legacy products
- All 10-year underperformance products that failed were retail or corporate funds
However, “industry” vs “retail” is a generalisation:
- Some retail funds and retail options perform competitively (especially low-cost index options)
- Some industry funds have also failed the performance test in specific options
- Individual options within each fund type vary more than the averages suggest
Past performance is not a reliable indicator of future performance.
Fees — The Most Important Difference
The fee gap between industry and retail funds is often the deciding factor for most members. On a $100,000 balance:
| Annual Fee Rate | Fee Cost | Balance Lost Over 30 Years (vs 0.5% baseline) |
|---|---|---|
| 0.5% (low-fee industry) | $500/year | — |
| 1.0% (mid-range retail) | $1,000/year | ~$100,000 |
| 1.5% (higher retail) | $1,500/year | ~$200,000+ |
Even a 0.5% fee difference compounds to a very large balance difference over a working lifetime. For most members with no specific need for an adviser or exotic investment options, lower fees directly translate to higher retirement balances.
When Might a Retail Fund Make Sense?
Retail funds can be appropriate when:
- Broad investment choice is needed — retail funds often offer hundreds of managed fund options, direct shares, and ETFs not available in industry funds
- Self-Managed Super Fund (SMSF) structure — some retail master trusts allow similar control to an SMSF with lower setup costs
- Specific insurance needs — some retail funds offer tailored or higher insurance cover amounts not available in industry defaults
- Adviser relationship — where ongoing financial advice is integrated with super management
For most ordinary workers in the accumulation phase, the fee advantage of industry funds is substantial enough that the broader investment menu of retail funds rarely justifies the additional cost.
What About MySuper?
All funds must offer a low-cost, simple MySuper product as a default for employer contributions. MySuper products are subject to APRA performance testing — underperforming products must notify members and can be shut down.
Both industry and retail funds offer MySuper products. The performance test has disproportionately affected retail MySuper products.
For further reading: Best Super Funds Australia, Super Fund Fees Comparison Australia, How to Choose a Super Fund. For advice tailored to your situation, speak with a licensed financial adviser through MoneySmart.