Best-performing growth funds for 2019 revealed
A surprise industry super fund has topped the table of Australia’s best-performing growth funds. Here’s if your money is with one of the nation’s top funds.
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An industry superannuation fund pitched at university workers has topped the table of Australia’s best-performing growth funds over the past year.
The UniSuper Balanced fund chalked up a return of 18.4 per cent in 2019.
That was significantly above the median return for growth funds of 14.7 per cent, according to super research house Chant West.
The median return itself was the highest since 2013, fuelled by surging share markets.
UniSuper’s return matched the rise in Australia’s benchmark share index, the ASX 200, which broadly tracks the nation’s 200 biggest listed companies.
Under Chant West’s categories, growth funds are those with 61 per cent to 80 per cent of their cash in growth assets such as shares. Most Australian workers have such a fund.
The UniSuper Balanced fund invests in Australian and international shares as well as cash and fixed-interest assets such as bonds.
Runner-up on the league table was Tasplan Balanced, another industry fund, with a return of 17.6 per cent.
The balanced option offered by the nation’s biggest super fund provider, AustralianSuper, ranked among the top five, with a 17 per cent return.
Earlier this week another research house, SuperRatings, said that under its rating system, the median return for balanced super funds was 13.8 per cent last year — the highest in five years.
According to Chant West, even the worst growth fund, at 10.5 per cent, chalked up a return almost 9 percentage points above the rate of inflation last year.
Conservative funds returned a more moderate 8.3 per cent, while the more aggressive “all growth” funds returned 20.8 per cent.
Shares were the main contributor to the broad strength in growth-fund performance, accounting for about 53 per cent of the allocated cash on average, but all asset sectors delivered positive returns.
Global listed infrastructure returned 24.2 per cent, global listed property returned 21.2 per cent and Australian-listed property returned 19.6 per cent.
“The better-performing funds were generally those that maintained higher allocations to listed shares, which had a terrific year,” Chant West senior investment manager Mano Mohankumar said.
Measured over a 10-year period, Hostplus, AustralianSuper and UniSuper were the top three funds, with returns as much as 9.2 per cent a year.
“The 2019 result brings the average return over the past 10 years to 7.9 per cent per annum,” Mr Mohankumar said.
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“That’s a tremendous run, but we should remember that it partly represents the recovery from the GFC when the median growth fund fell about 26 per cent.”
He cautioned growth funds were not designed to yield such high returns over the long term and were intended to typically return 3.5 per cent above inflation each year, or 5.5 per cent to 5 per cent a year over the long term.
“It would be a mistake to assume that the level of returns over the past decade will continue,” he said.
“At some stage they’re going to revert to more ‘normal’ levels, and there will be more challenging times ahead.”
A similar note of caution came from SuperRatings, which earlier this week tipped “solid” super returns for the year ahead but urged investors to temper expectations of double-digit gains.
— The Australian