Indexed investing: Down to the basics

First things first: What’s an index?

An index is a way to measure the performance of a section of the market. It’s a collection of investments grouped together (like shares, fixed interest or cash) to represent part of the market. For example, the ASX 300 tracks the 300 largest companies on the Australian stock market. If a company grows enough to make the list, it’s added. If it shrinks, it’s removed. This constant adjustment keeps the index aligned with the market.

So, what does ‘indexed investing’ mean?

Indexed investing is about following the market rather than trying to beat it. An indexed investment option aims to replicate the performance of a specific index by investing in the same assets, in the same proportions, as the index itself. The goal isn’t to outperform, it’s to match the market’s returns as closely as possible.

This approach is often called passive investing because it doesn’t involve active decision-making by fund managers. Instead, it uses a rules-based method to keep things aligned with the index.

Why introduce indexed options?

Simple – we did it for our members. You told us you wanted more choice, particularly investment options with low fees. Indexed options tick that box because they invest in a limited number of asset classes and don’t require the same level of research, manager skill, breadth of investments and trading as actively managed options. Less complexity means lower costs.

What are Super SA’s indexed options?

On 1 December 2025, we introduced Indexed Balanced and Indexed High Growth. Both options invest in Australian shares, international shares, fixed interest, and cash. They are more concentrated in the major asset classes to keep costs down. They don’t invest in other growth asset class like property, infrastructure, private equity, property or credit which you’ll find in the actively managed options. That’s worth considering when comparing your choices.

Because the indexed investment options rely heavily on shares for returns, they’re classified as high risk. That means, while they have the potential to deliver strong long-term returns they will also feel the ups and downs of the market more sharply.

How do they compare to existing investment options?

Most of Super SA’s existing options (except Cash) are actively managed by our investment partner, Funds SA. That means professional fund managers research companies and make investment decisions to try to outperform the market. The active options, use a wider range of asset classes to help grow your balance. By investing in a wider range of assets, the active investment options are more diversified and generally have a lower risk.

Indexed options stick to the market’s rhythm – attracting lower fees, but also less diversification and a lower return objective compared to the active investment options, since they don’t include many of the growth asset classes that the active options invest in.

What does this mean for you?

This is about choice to meet your preferences and risk appetite.

Indexed options give another way to invest, alongside the actively managed options that have been available for years. Whether you prefer the simplicity of tracking the market or the potential benefits of active management, the decision is yours.

Understanding indexed investing is another step in making choices that suit you. Because when it comes to your super, it should reflect who you are.

You’ll find everything you need for all available investment options – asset allocations, fees, and switching options– in your scheme’s Investment Guide.