The 2021 financial year saw a rapid recovery from the economic downturn, followed by ongoing growth as confidence soared on the back of the development of COVID-19 vaccines. This led to the hope of a return to a more normal lifestyle, with superannuation funds riding the market highs to deliver some of the best returns members have seen since superannuation was introduced.
With super funds finalising their reporting for June 2021, the strength of the market rebound is clear. The top 20 performing balanced options all returned over 18% to their members over the year, a result that nobody would have predicted 12 months ago.
According to data from leading research house SuperRatings, QANTAS Super Gateway – Growth was the top performing fund over the 2021 financial year, returning 22.0%. This was followed by BT Panorama Full Menu – BT Wholesale Multi-manager and Hostplus whose balanced options returned 21.4% and 21.3% respectively.
Top 20 balanced options over 12 months
Source: SuperRatings
While extraordinary performance over the last 12 months is to be acknowledged, long-term returns are what really count. Here is where members can see which funds have consistently delivered quality returns.
The top performers over ten years were AustralianSuper, whose balanced option has returned 9.73% p.a. over the last decade, followed closely by Hostplus – Balanced and Cbus – Growth (Cbus MySuper) returning 9.67% and 9.6% respectively.
Top 20 balanced options over 10 years
Source: SuperRatings
COVID-19 introduces market downturns to the next generation of investors
Before the impact of the COVID-19 pandemic, the globe had seen the longest run of growth in its history. As a result, the market crash in February 2020 would have been the first time younger investors experienced such a significant and sharp fall in their wealth. Increasingly, investors are acknowledging the importance of not only the return that an option delivers but also the level of risk it takes on to achieve that return.
One way to examine this is looking at the ups and downs in returns over time. Growth assets like shares may return more on average than traditionally defensive assets like fixed income, but this comes with a bumpier ride.
The table below shows the top 20 funds ranked according to their volatility-adjusted return, which measures how much members are being rewarded for taking on the ups and downs.
QSuper’s balanced option return of 8.1% p.a. over the past seven years is below some of its peers, but it has achieved this with a smoother ride along the way, meaning it has delivered the best return given the level of volatility involved.
Top 20 balanced options over 7 years ranked by risk and return
| Option Name | Risk Ranking | 7 Yr Return (p.a.) |
|---|---|---|
| QSuper – Balanced | 1 | 8.1% |
| BUSSQ Premium Choice – Balanced Growth | 2 | 8.5% |
| Prime Super – MySuper | 3 | 8.7% |
| CareSuper – Balanced | 4 | 8.7% |
| Cbus – Growth (Cbus MySuper) | 5 | 9.2% |
| Spirit Super – Balanced (MySuper) | 6 | 8.7% |
| Catholic Super – Balanced Growth (MySuper) | 7 | 8.4% |
| Aware Super – Growth | 8 | 8.6% |
| VicSuper FutureSaver – Growth (MySuper) Option | 9 | 8.6% |
| AustralianSuper – Balanced | 10 | 9.6% |
| Mercy Super – MySuper Balanced | 11 | 8.3% |
| CSC PSSap – MySuper Balanced | 12 | 8.0% |
| Media Super – Balanced | 13 | 8.3% |
| Sunsuper for Life – Balanced | 14 | 8.9% |
| Hostplus – Balanced | 15 | 9.5% |
| NGS Super – Diversified (MySuper) | 16 | 8.1% |
| Vision SS – Balanced Growth | 17 | 8.8% |
| HESTA – Balanced Growth | 18 | 8.5% |
| Active Super – Balanced Growth | 19 | 8.0% |
| Equip MyFuture – Balanced Growth | 20 | 8.5% |
Source: SuperRatings
Sustainable options keep pace with the market recovery
Sustainable investments are becoming increasingly appealing to a broad range of investors, as the impacts of businesses on people and places becomes more widely accepted.
While a relatively recent addition to many funds’ portfolios, long-term returns remain crucial when looking at sustainable options. The table below shows the top 10 sustainable balanced options ranked according to their 5 year return.
SuperRatings data shows that HESTA’s Sustainable Growth option provided the highest return to members over 5 years for a dedicated sustainable option, with a return of 11.8%. This was 1.2% more than the highest balanced option return over the same period. This was followed by the UniSuper Accum (1) – Sustainable Balanced and VicSuper FutureSaver – Socially Conscious options which returned 10.2% and 9.8% respectively.
Top 10 sustainable balanced options over 5 years
Source: SuperRatings
“Overall, returns for the 12 months to June 2021 should provide everyday Australians with confidence that super funds have capitalised on the market recovery, while also performing well during the sell-off in March 2020”, said SuperRatings Executive Director Kirby Rappell.
Mr Rappell continued “while we saw funds that had a high exposure to equity markets fall dramatically when the pandemic first hit markets in February, these were the same funds that then rebounded strongly as markets recovered.
In saying that, it has been the year of domestic and global shares and listed property as key drivers of performance.”
The funds that have performed well on a 10 year basis followed a range of approaches. We have seen funds pursuing alternatives continue to perform well, although we expect to see a greater emphasis on asset allocation in coming years as funds look to drive down costs over the long term.
Mr Rappell commented, “a really interesting trend has been the evolution of funds’ sustainable options. In the past, the average sustainable option’s return tended to lag the standard balanced option. However, in more recent times, these options have performed well with the top performing options surpassing their typical balanced style counterparts in some cases.”
The key message here for funds and members is to take the time to think about your long-term strategy. The recent pandemic has reinforced the importance of setting up your super in the best way, to ensure you are on track for your retirement. Volatility will come and go, but having a long-term strategy is what will give you the comfort and confidence to ride it out.
Release ends
Warnings: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to “General Advice” (as defined in the Corporations Act 2001(Cth)) and based solely on consideration of the merits of the superannuation or pension financial product(s) alone, without taking into account the objectives, financial situation or particular needs (‘financial circumstances’) of any particular person. Before making an investment decision based on the rating(s) or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances, or should seek independent financial advice on its appropriateness. If SuperRatings advice relates to the acquisition or possible acquisition of particular financial product(s), the reader should obtain and consider the Product Disclosure Statement for each superannuation or pension financial product before making any decision about whether to acquire a financial product. SuperRatings research process relies upon the participation of the superannuation fund or product issuer(s). Should the superannuation fund or product issuer(s) no longer be an active participant in SuperRatings research process, SuperRatings reserves the right to withdraw the rating and document at any time and discontinue future coverage of the superannuation and pension financial product(s).
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