Super party rolls on: the best Aussie funds of the past 10 years

A golden run for superannuation funds is nearing an end, so how long can our nest eggs keep growing? Here are the funds that have performed the best - and what to do when they start to fall.

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Super funds are heading for their eighth consecutive year of positive growth but it comes with a warning that the good times won’t last.

With just one month left of 2019, typical balanced superannuation funds are on track for an annual investment return above 10 per cent.

This is well above their average annual return of 8.6 per cent for the past decade, which itself is well above long-term super growth targets of 3.5 per cent a year plus inflation.

Standout super funds over the past 10 financial years include AustralianSuper, Hostplus and UniSuper, according to a MoneysaverHQ analysis of data from three research groups: SuperRatings, Chant West and Rainmaker’s SelectingSuper.

SuperRatings executive director Kirby Rappell said the past 10 years would highly likely be looked on as a “golden decade for many super funds”.

“While we saw significant losses during the GFC, we saw a V-shaped recovery in returns as funds recovered losses and have continued to grow,” he said.

“This has been one of the longest bull runs in history.”

Mr Rappell said low interest rates globally had helped support a run-up in asset prices.

“Unless we see continued global economic growth, it is going to be hard to repeat as the room for further interest rate falls is extremely constrained,” he said.

Chant West senior investment research manager Mano Mohankumar said the returns experienced over the past 10 years were not sustainable.

“A typical fund isn’t designed to return close to 9 per cent per annum,” he said.

“We expect more modest returns going forward and we do expect a challenging period. Most asset classes are fully valued or close to fully valued.”

Chant West’s Mano Mohankumar.

Alex Dunnin from Rainmaker.

Mr Mohankumar said people with more than a decade before retirement should seek professional advice covering both their super and other assets.

“Superannuation is a long-term investment,” he said.

“Make sure you check the investment option you are in to make sure it’s appropriate – if it is, remain patient and don’t be distracted by short-term noise.”

Nobody knows when the next fall in super fund returns will come, but the strong gains of recent years mean it could be nasty.

Rainmaker director of research Alex Dunnin said “there will be a downturn but we don’t know when”.

“But we can be sure that when it does come we’ll be swamped by people who said they predicted it down to the hour,” he said.

“The rest of us should meanwhile do what most smart investors do: diversify, try to control our risks, and avoid unnecessary debt.”

Mr Dunnin said people worried about a downturn could “dial down your risk a bit now, perhaps by moving some of your super from high growth to moderate.”

He said people should compare their fund’s returns relative to its peers.

Super funds will face increased scrutiny from this month when regulator APRA releases heat maps showing their performance for returns, fees and sustainability.

@keanemoney

TOP FUNDS OVER TEN YEARS

AustralianSuper – Balanced 9.8%

Hostplus – Balanced 9.7%

UniSuper – Balanced 9.6%

QSuper Balanced 9.5%

Cbus MySuper – Growth 9.4%

CareSuper – Balanced 9.3%

Source: SuperRatings, Chant West, SelectingSuper, based on performance to July 2019