What are index investment options?

Most of us may not read the financial papers from cover to cover or watch the stock markets like a hawk. But that doesn’t mean we don’t care about how our super is invested. Part of our job at Rest is to help you make the most of your super.

That’s why we offer a range of different super options to help get your money working for you.

Active vs Index

Actively managed investment options are where a team of investment managers aim to outperform the stock market and manage market risk by adjusting your portfolio. This includes trading shares, bonds, or other assets relevant to your option, and making regular investment decisions on your behalf. 

This doesn’t generally happen in index options. Instead, your money is invested with the aim of replicating the returns of the market that you’ve invested in, as represented by the index. For example, if you opt for an Australian shares index, shares will be bought (and sold) for you with the aim of closely tracking the market of the index, like the S&P/ASX300. 

Once you’ve chosen what to invest in, your investment outcome should simply follow the market return, be it up, or down. This is where understanding risk is important.

When you choose an index option, you aim to get the market return. This is great when markets are rising, but if markets fall, so will the value of your investment. Because the option is not actively managed, the risks are not managed as the index option will follow the market during a market fall.   

The benefits of index investing can include low fees, simplicity and cost-effective access to the market covered by the index.

Why are there no investment fees for index investment options?

Because Rest’s actively managed options involve more direct management of investing than index options, you’ll pay an investment fee. For example, Rest’s Core Strategy is actively managed by our investment team, and therefore has an investment fee. The good news is that even with this fee, our Core Strategy fees are at least 20% lower than the super industry average*.

For our index options, the investment fee is 0%. However, you will still need to pay other fees and costs, including administration fees and costs, transaction costs, buy-sell spread and insurance fees (if applicable) in relation to your super. You can read more about this in the PDS available at rest.com.au/pds.

*Rest analysis using Chant West Member Outcomes Dashboard (31/01/2024). Rest Core Strategy compared against the average of 51 available super funds’ growth-style options tracked by Chant West. Includes admin fees and costs, investment fees and costs, transaction costs, and costs met from reserves. Other fees and costs may apply. Fees are only one factor to consider when investing super. Chant West does not issue, sell, guarantee or underwrite this product. Go to www.chantwest.com.au for ratings criteria.