Aust Super posts ‘solid’ results but misses US tech stock boom

Australia’s largest super fund says its balanced option has posted a ‘solid return’ while acknowledging other super funds with exposure to US tech stocks performed better.

Australian Super chief investment officer Mark Delaney. Picture: AAP Image/David Moir

Australia’s largest super fund, AustralianSuper, reported a “solid return” of 8.46 per cent over the year for its balanced investment option with its high growth option coming in at 10.2 per cent for the year continuing the strong investment performance growth of super funds for the year.

But the fund’s chief investment officer Mark Delaney has acknowledged that some other super funds, which have had a strong exposure to US tech stocks over the year, have performed better.

He said fund managers who took an index approach to investing and had a high exposure to US tech stocks had shown stronger returns, but he said over time a more active approach to investing, which was preferred by AustralianSuper, would deliver better returns.

The fund described its returns as “solid”, coming in around the same level as last financial year.

More than 90 per cent of fund members are invested in the balanced option.

Mr Delaney said the financial year had been one of two halves, with the second half being boosted by the strong performance of US tech stocks, including Nvidia.

He said the Covid investment cycle was coming to an end, with interest rates expected to fall, but with inflation remaining higher than before Covid.

Mark Delaney. Picture: Supplied

He said funds which had a heavy exposure to technology stocks had done particularly well over the year, while investments exposed to high interest rates had struggled.

“Those investments exposed to higher interest rates really struggled, including fixed income,” he said.

“Even infrastructure didn’t do as good this year as last year.”

“Property, which has got both revenue problems and suffered from the impact of higher interest rates was the worst performing asset class.”

The fund said its retirement option, Choice Income, saw a return of 9.25% in the Balanced Option for the 2024 financial year and had delivered an average annual return of 9.67% over 15 years.

Mr Delaney said it was a “pleasing result all round” for fund members.

“Despite market volatility driven largely by geopolitical tensions and a complicated economic landscape, AustralianSuper has delivered solid returns to members to help them achieve their best financial position in retirement,” he said

He said AustralianSuper’s Balanced investment option had delivered an average annual return of 4.51 per cent over three years, 6.68 per cent over five years, 8.07 per cent over 10 years and 8.72 per cent over 15 years to 30 June 2024.

He said the main driver behind the result for the latest financial year was the strong growth in listed share markets in Australia and overseas.

“Equities have done well due to strong earnings growth from technology companies in the US and strong consumer spending in Australia and overseas, which helped to drive up company earnings,” he said.

He said easing inflation had also boosted investor confidence which had lifted markets to higher levels.

He said the very different performance of sectors – from property and fixed income to shares were a reminder of the benefits of having a diversified portfolio.

“Our investment strategy continues to focus on balancing potential growth opportunities with diversification to deliver positive returns for members and stability across market cycles,” he said.

He said AustralianSuper was “strongly focused on assets that will grow balances over time.”

The fund’s balanced option has seen an average annual return of 7.85 per cent for members over the past 20 years.

This means that $100,000 invested in a Balanced option super account 20 years ago would have grown to $453,848 as at 30 June this year, without additional contributions.