Australian super funds post 11.5pc return in 2024 despite volatile year

Super fund balances have had one of the best years in the past decade as those with exposure to international shares enjoy double-digit returns.

The typical balanced super fund has posted an 11.5 per cent return in 2024, according to SuperRatings.

Super funds have delivered their third best returns of the past decade and the highest since 2021.

The high-risk strategies employed by aggressive growth funds have paid off in a bumper year for members.

Analysis by SuperRatings shows that the median balanced option returned 11.5 per cent for 2024, and most options delivered a return of more than 10 per cent, while the top providers achieved 12.5 per cent.

A balanced option has 60 to 76 per cent of assets invested in growth assets over the long term across sectors including Australian shares, international shares, property, alternatives, fixed interest and cash.

SuperRatings chief executive Kirby Rappell said 2024 was a surprisingly strong year despite plenty of uncertainty in market conditions stemming from interest rates staying higher for longer than previously expected and inflation being slower to return to target.

“It has been a year of surprisingly strong and consistent positive returns for the industry where superannuation funds have strongly benefited from international share exposure leading to double-digit returns,” he said.

“We have continued to see strong performance in equity markets that have been the key driver of this return outcome. Top-performing options for 2024 are likely to again be those with high equity exposures.”

Australians have experienced the third best return by their super funds in the past decade.

Returns were modest leading into Christmas, and the research house reported that the median balanced option generated a return of 0.4 per cent over the month. However, positive returns over 11 of the 12 months in the year have added up to deliver millions of Australians an 11.5 per cent return.

It is the strongest result since 13.4 per cent in 2021 when equities rebounded from sluggish performance during the Covid-19 pandemic. The best return in the past 10 years was 14.7 per cent in 2019, while a 16.3 per cent bounce in 2013 is the best result this century. Since 2000, the typical balanced super fund has only had four negative returns – the most recent being in 2022 thanks to a rapid rise in interest rates and multi-decade inflation highs.

Mr Rappell said there were still risks in 2025 despite consistent positive returns in 2024.

SuperRatings executive director Kirby Rappell.

“Most of this year’s returns have come from sharemarkets, which are now priced at historical highs, both in Australia and internationally,” he said.

“A correction in sharemarkets would have a strong flow-on effect to members’ superannuation balances and members should be prepared to see ups and downs over the short term.

“Inflation, particularly in Australia, also continues to be persistent, with Australian interest rates likely to come down slowly over time and cost-of-living pressures to remain elevated.”

Mr Rappell said members should focus on long-term growth instead of single-year results, adding that funds have consistently demonstrated their ability to swiftly recover from downturns and members with many years until retirement could afford to ignore short-term noise in returns.

Long-term returns have averaged 6.7 per cent per annum since 2000 and are above the target objective of 3 per cent return when CPI is factored in.

Returns have been driven by a strong year for US equities, with the tech-heavy Nasdaq up 28 per cent for the year to date, the S&P 500 climbing 25 per cent and the Dow Jones Industrial Average adding 14 per cent. Over the period the ASX 200 accumulation index gained about 13 per cent.