Superannuation funds recorded another impressive year for members with international tech and Australian banking shares driving above average returns.
In the balanced category, where 60-76 per cent of portfolios are invested in growth assets, the top three performers in FY24 were Hostplus Indexed Balanced, Raiz Super’s Moderately Aggressive and Colonial First State’s Enhanced Index Balanced.
These funds returned 12.2 per cent, 12.1 per cent and 11.4 per cent respectively.
Hostplus’ Balanced option remained the highest performing balanced option over 10 years returning 8.3 per cent per annum.
"In a repeat of 2023, funds with a higher exposure to shares and listed assets generally outperformed for the year, while those with greater exposure to unlisted property reported more subdued outcomes," says Super Ratings' Kirby Rappell.
"As a result, members who were invested in index funds generally outperformed more actively managed options, given the strong focus on, and allocation towards, listed shares."
The top performing indexed fund was Aware Super’s Future Saver – Balanced Indexed option with a return of 12.9 per cent for the year to June, while all top 10 indexed options returned double digits to members.
Members who are invested in default options also did well over the year.
Funds that have adopted a lifecycle investment style outperformed single default options due to their higher allocation to shares, particularly for younger members.
“We have noticed a trend of lifecycle options increasing their exposure to growth assets such as shares over the past 12 months,” Mr Rappell said.
“While this has benefited members this year, higher exposure to these assets also comes with increased ups and downs, and we encourage members to learn how their fund’s investment strategy works so they are comfortable with annual and long-term performance outcomes.”
Investments with a sustainable focus have also outperformed over the year with Raiz Super’s Emerald investment option reporting the highest balanced option return at 14.8 per cent.
The option was also the top performing sustainable option over 5 years, with a return of 8.4 per cent per annum.
“Managing volatility is a key function for superannuation funds, with the need to consider downside risk increasingly evident over recent years,” Mr Rappell added.
“While this has meant some funds that were more defensively positioned didn’t benefit as much from this year’s share rally, having strong diversification supports smoother returns over the long term”.
