Industry superannuation fund BUSS(Q) has terminated a cash mandate worth nearly $30 million with QIC to take advantage of the government bank guarantee.

Investments supporting the cash investment option in the BUSS(Q) superannuation fund and the BUSS(Q) pension fund are now invested in government guaranteed term deposits over a range of banks, building societies and credit unions.

Previously this investment option was fully invested in the QIC cash enhanced fund.

According to BUSS(Q) chief executive David O'Sullivan, members who invested in the straight cash option had an expectation of extremely stable returns.

"I guess we learnt the hard way that a fund like QIC didn't really provide the suitability of return that the cash investors were looking for and that's why we changed the mandate. We think it's a good fund, but it didn't really match our investors' expectations," O'Sullivan said.

"What we didn't want was people retiring and taking their money out of the fund completely."

The largest investment was made with Macquarie Bank, but BUSS(Q) also made an investment in a Colonial First State Asset Management cash fund.

O'Sullivan said the fund for the Queensland building and construction industry also wanted to respond to the margins available for term deposits that were also government guaranteed.

"That way we could give members both a stable return and an excess return as well," O'Sullivan said.