Your personal return won't necessarily match the official return for the option you're invested in. In fact, sometimes the two can be very different.
Here we explain why
How we calculate your individual rate of return
Your individual rate of return is determined by not only the performance of your investment option(s) but also the timing and amount of your transactions. Your individual rate of return will depend on:
- your account balance at the beginning of the period
- your account balance at the end of the period
- the size and timing of the transactions such as contributions, withdrawals, switches, and rollovers in/out
- fees and insurance premiums.
You only receive one individual rate of return, even if you are invested in more than one investment option.
Returns for each investment option
The returns for each investment option are based on the movement in unit prices for the relevant period. These returns assume money is invested for the entire period and they don’t take into account the effect of individual member transactions. While the market value of investments changes every day, the returns for the investment options are based only on the unit prices at the start and the end of the relevant period.
Why there could be a difference
Let’s say you’re a super member invested in the Growth option, which earned 12.4% between 1 July 2016 and 30 June 2017. But your individual rate of return was only 9.4%.
Why is there a difference? The answer is twofold: transactions on your account and the dates these transactions occurred. Your individual rate of return takes into account how much you had invested, as well as the return generated over the period your money was invested.
Keep in mind that returns go up and down over time and the performance of your investment option before and after any transaction could result in a difference.
In general terms,
- larger transactions have a greater impact on your individual rate of return than smaller transactions; and
- the more volatile the performance of an investment option, the greater the potential difference between your individual rate of return and the option return.
The impact of a transaction can be either positive or negative and the actual difference is a combination of both the amount and the timing of the transaction.