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

To upgrade your iRate subscription to include Super Fund Research, call us on 1300 826 395. Not a subscriber? You can trial our market leading research platform for two weeks here.

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).

Copyright © 2021 SuperRatings Pty Ltd (ABN 95 100 192 283 AFSL No. 311880 (SuperRatings)). This media release is subject to the copyright of SuperRatings. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth.), no part of this media release may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of SuperRatings. This media release may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to SuperRatings copyrighted material, applies to such third party content.

We are very happy to advise that Netwealth has added Lonsec’s Sustainable Managed Accounts to their menus.  The Lonsec Sustainable Managed Accounts complement our existing range of managed accounts available on Netwealth –  Lonsec Listed Managed Accounts, Lonsec Retirement Managed Accounts and Lonsec Multi Asset Managed Accounts.

We are a proven partner in Portfolio Construction with over 20 years of experience and expertise that has seen Advisers and their clients through multiple market cycles and conditions.

The Lonsec Sustainable Managed Accounts have a unique philosophy that looks through both lenses of ESG, which focus on the underlying managers’ take around Ethical, Sustainable & Governance metrics, along with Sustainability measures, which focus on how to demonstrate the goodness of the included funds. We also take into account the United Nations’ 17 Sustainable Development Goals when choosing funds for inclusion in the managed accounts. Coupled with our proven investment philosophy of both SAA & DAA considerations and proven downside market risk mitigation, this makes a compelling offer in a market where investors are becoming more and more ethically focused.

The Lonsec Sustainable Managed Accounts are the only actively managed, risk diversified and multisector portfolio with a highly qualitative focus on sustainability measures of its class.

A spokesperson for Lonsec said ‘Over the past five years we have seen increased investor appetite for sustainable and ethical investments that also provide a solid return.  Our suite of managed accounts has doubled their FUM over the past 12 months and we are happy to partner with Netwealth to bring this unique product to more Advisers and investors.’

The Lonsec Sustainable Managed Accounts joins our suite of managed accounts available on Netwealth including:

Lonsec Listed Managed Accounts – Portfolios built on the 20-year proven Lonsec investment philosophy, incorporating an active approach while using passive style assets to achieve a lower overall cost for investors
Lonsec Retirement Managed Accounts – Diversified, actively managed portfolios for income seekers with a proven yield objective of +4%
Lonsec Multi Asset Managed Accounts – Portfolios built across multiple asset types allowing best of idea execution while also delivering the most diverse and risk-controlled outcomes for investors

The Lonsec Board of Directors is very pleased to announce the appointment of Mike Wright as CEO of Lonsec effective 5th July 2021.

Lonsec Chairman Mark Spiers said, “Mike’s unique blend of leading teams to develop and implement client-oriented growth and service initiatives along with his strong industry relationships and knowledge were exactly the leadership attributes that we were seeking.”

“By continuing to stay close to our clients Lonsec has enjoyed significant growth across all its business units and I am excited to be able to work with the great team at Lonsec to continue to build on this,” said Mike.

Mike was most recently the CEO of Xplore Wealth, an ASX listed company specialising in providing managed account investment solutions to financial advisers. Xplore Wealth was successfully acquired by Hub24 via a Scheme of Arrangement, completed 2nd March 2021.

Prior to this, Mike had a long and successful career in the Westpac/BT Group, where he held senior executive roles with Westpac’s Retail & Business Banking, and was State General Manager of Queensland before leading the Advice business at BT.

Release ends

For more information, contact:

Rob Hardy
robert.hardy@lonsec.com.au
+61 2 8651 6744

While not as strong out of the gates as members had hoped, January’s result nevertheless marked the tenth consecutive month of gains for super funds as members continue to claw back their losses since the start of the pandemic a year ago.

According to SuperRatings data, the median balanced option and median growth option both returned an estimated 0.4% in January, while the median capital stable option was flat at 0.1%. Over the 2021 financial year to date, the median balanced option returned 9.1%, reflecting the strength and speed of the recovery in the second half of 2020.

As Victoria endures a snap five-day lockdown and other state governments increase testing and tracing efforts in the face of the new ‘UK variant’ of the COVID-19 virus, markets are still exposed to potential downside risk. Despite good news on the vaccine front, it will take time for vaccines to be distributed nation-wide to every demographic. Until then, members should be ready for a bumpy ride in 2021.

“Super funds have had a promising start to 2021, but the pandemic isn’t over yet,” said SuperRatings Executive Director Kirby Rappell.

“Movements in financial markets are still closely tied to how governments are managing new COVID-19 cases, as well as the timing and efficacy of vaccines. In short, we expect more ups and downs in the market, and super funds are not immune.”

Accumulation returns to end of January 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a)
SR50 Growth (77-90) Index 10.8% 1.7% 6.5% 8.8% 8.1% 8.2%
SR50 Balanced (60-76) Index 9.1% 1.8% 5.9% 7.7% 7.2% 7.6%
SR50 Capital Stable (20-40) Index 4.2% 1.1% 3.7% 4.6% 4.6% 4.9%

Source: SuperRatings estimates

Pension returns were also slight but positive in January. The median balanced pension option returned an estimated 0.3% in January and 9.9% over the financial year to date. The median pension growth option returned an estimated 0.4% and the median capital stable option returned an estimated 0.1% through the month.

Pension returns to end of January 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a)
SRP50 Growth (77-90) Index 11.9% 2.0% 7.1% 9.7% 9.0% 9.1%
SRP50 Balanced (60-76) Index 9.9% 1.8% 6.5% 8.5% 8.1% 8.4%
SRP50 Capital Stable (20-40) Index 4.7% 1.4% 4.3% 5.2% 5.1% 5.7%

Source: SuperRatings estimates  

The pandemic still looms large across the global economic landscape, with over 100 million confirmed COVID-19 cases worldwide at the start of February. The gradual rollout of vaccines is offering hope that we can achieve a new normal despite early logistical roadblocks and shortages in some regions.

Meanwhile Australia’s recovery continues and has been most evident in the labour market, which continues to outperform expectations. The unemployment rate fell from 6.8% to 6.6% in December with 50,000 jobs added over the month. While lockdowns will likely continue to be used as a policy tool, they will hopefully be shorter and more targeted.

According to SuperRatings, super funds are in good health and well positioned for 2021 despite the challenges.

“One thing that was reinforced in 2020 is that Australia’s superannuation system is built to withstand market storms and even pandemics,” said Mr Rappell.

“Overall funds are focused on the risks and opportunities that lie ahead. To date, they have shown the ability to manage their investment positions and provide the additional support that many members need in this environment.”

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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).

Copyright © 2021 SuperRatings Pty Ltd (ABN 95 100 192 283 AFSL No. 311880 (SuperRatings)). This media release is subject to the copyright of SuperRatings. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth.), no part of this media release may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of SuperRatings. This media release may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to SuperRatings copyrighted material, applies to such third party content.

In a year defined by the global pandemic and the locking down of economies, the superannuation system faced arguably one of its toughest test in its 29-year history.

Now, as super funds finalise their reporting for December 2020, the strength of superannuation’s comeback is clear. Despite the market turmoil in the first half of the year, Australia’s top super funds have posted some remarkable results.

Long-term returns have also held up well, evidenced by the 10-year performance rankings, demonstrating the quality of funds available to members.

According to data from leading research house SuperRatings, Suncorp was the top performing fund over the 2020 calendar year, with the Suncorp Brighter Super Pers – Suncorp Multi-Manager Growth Fund returning 9.6%. This was followed by Australian Ethical and Vision SS, whose balanced options returned 8.0% and 6.2% respectively.

Top 20 balanced options over 12 months

Source: SuperRatings

Moving out to 10 years, the top performers were UniSuper, whose balanced option has returned 9.0% p.a. over the last decade, followed closely by AustralianSuper and Cbus.

Top 20 balanced options over 10 years

Source: SuperRatings

Spotlight on risk and return in wake of COVID-19

It is important to consider not only the return that an option delivers but also the level of risk it takes on to achieve that return. A rough way to examine this is the variability in returns over time. Growth assets like shares may return more on average than traditionally defensive assets like fixed income, but this comes with larger ups and downs.

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 7.9% p.a. over the past seven years is below some of its peers, but it has done 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 Rolling 7-year return (% p.a.)
QSuper – Balanced 7.9%
BUSSQ Premium Choice – Balanced Growth 7.8%
Prime Super – MySuper 7.9%
Cbus – Growth (Cbus MySuper) 8.5%
CareSuper – Balanced 7.9%
MTAA Super – My AutoSuper 8.0%
Catholic Super – Balanced (MySuper) 7.7%
VicSuper FutureSaver – Growth (MySuper) Option 8.0%
Mercy Super – MySuper Balanced 7.7%
AustralianSuper – Balanced 8.8%
Aware Super (previously First State Super) – Growth 7.8%
Media Super – Balanced 7.6%
CSC PSSap – MySuper Balanced 7.1%
Sunsuper for Life – Balanced 8.0%
Hostplus – Balanced 8.4%
Vision SS – Balanced Growth 7.9%
HESTA – Balanced Growth 7.7%
Club Plus Super – MySuper 7.3%
Equip MyFuture – Balanced Growth 7.7%
Local Government Super Accum – Balanced Growth 7.3%

Source: SuperRatings

“What the calendar year figures hide is the rollercoaster movements members experienced as the market sold off back in March 2020 and then rapidly recovered,” said SuperRatings Executive Director Kirby Rappell.

“As members accumulate wealth over time, market movements will have a bigger impact on their account balance in dollar terms. This is a challenge for funds and members as the average super balance rises over $100,000, with the need for education and support paramount.”

While it is important to acknowledge those funds that have outperformed over 2020, members should bear in mind that long-term performance is what really counts.

“Overall, funds have done an excellent job of managing risks through a tumultuous period,” said Mr Rappell. “Super is a long-term game, so it’s pleasing to see long-term returns remain healthy and ahead of their CPI+ targets.”

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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).

Copyright © 2021 SuperRatings Pty Ltd (ABN 95 100 192 283 AFSL No. 311880 (SuperRatings)). This media release is subject to the copyright of SuperRatings. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth.), no part of this media release may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of SuperRatings. This media release may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to SuperRatings copyrighted material, applies to such third party content.

November was the strongest month for superannuation in 2020 and the 8th consecutive month of positive returns for members.

As COVID-19 restrictions ease nation-wide and investors look forward to the approval and distribution of a vaccine, share markets globally have pushed to record highs, delivering windfall gains for super members.

According to estimates from leading superannuation research house SuperRatings, the median balanced option returned 4.9% in November as members enjoyed an early Christmas gift that has put them back into the black over the course of a volatile and uncertain year.

Since the start of 2020 the median balanced option has delivered 2.3% and is on track to finish the year in positive territory. Super has bounced back strongly in the second half of the year, returning 7.5% from the start of July to the end of November, reversing the large falls back in February and March.

According to SuperRatings data, the median growth option returned an estimated 6.2% in November and 2.4% over the calendar year, while the median capital stable option returned an estimated 2.0% in November and 1.7% over the calendar year.

“We’ve had a watershed month for super and hopefully this strong performance can continue through to the new year,” said SuperRatings Executive Director Kirby Rappell.

“Given the world is battling a pandemic that has resulted in large sections of the economy being placed in lockdown, the results are remarkable. This is the year super proved its worth once again and reminded us why it is so critical to our economic success.”

Accumulation returns to end of November 2020

CYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a)
SR50 Growth (77-90) Index 2.4% 2.4% 6.6% 7.9% 8.0% 8.4%
SR50 Balanced (60-76) Index 2.3% 2.2% 5.8% 7.1% 7.3% 7.9%
SR50 Capital Stable (20-40) Index 1.7% 1.5% 3.8% 4.3% 4.6% 5.1%

Source: SuperRatings estimates

Pension returns had a similarly strong month. The median balanced pension option rose an estimated 5.4% in November and 2.6% over the calendar year. The median pension growth option rose an estimated 6.8% in November and 2.6% over the calendar year, and the median capital stable pension option returned an estimated 2.3% in November and 2.0% over the calendar year.

Pension returns to end of November 2020

CYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a)
SRP50 Growth (77-90) Index 2.6% 2.6% 7.3% 8.7% 8.9% 9.3%
SRP50 Balanced (60-76) Index 2.6% 2.4% 6.6% 7.8% 7.9% 8.5%
SRP50 Capital Stable (20-40) Index 2.0% 1.7% 4.4% 5.0% 5.2% 5.9%

Source: SuperRatings estimates  

The global recovery is underway and is looking sufficiently V-shaped, but recent economic news has been mixed. Infection rates have risen in the US and Europe, causing a loss of momentum, but news of successful vaccine trials have boosted confidence.

The UK has begun rolling out the Pfizer-BioNTech vaccine, while Australia and the US are preparing to do the same once the vaccine is approved. Meanwhile, China has ramped up its trade conflict with Australia, putting tariffs of up to 200% on Australian wine and suspending the importation of Australian beef, barley and timber.

“Australia’s success in containing the coronavirus has put us in an enviable position, but there are still significant risks at play. The pandemic is not yet defeated and there are geopolitical issues weighing on the outlook. Members should be optimistic but prepare themselves for potential surprises as we head into 2021.”

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).

Copyright © 2020 SuperRatings Pty Ltd (ABN 95 100 192 283 AFSL No. 311880 (SuperRatings)). This media release is subject to the copyright of SuperRatings. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth.), no part of this media release may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of SuperRatings. This media release may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to SuperRatings copyrighted material, applies to such third party content.

SuperRatings and Lonsec have announced the winners of this year’s Fund of the Year Awards, which was held virtually for the first time in the event’s 18-year history.

The Fund of the Year Award went to QSuper, which also took home the Pension of the Year Award and the Smooth Ride Award. UniSuper claimed the MySuper of the Year Award, and Sunsuper clinched the MyChoice Super of the Year Award.

The winners were announced at a virtual awards event on 29 October, broadcast live from the Museum of Contemporary Art, Sydney.

“It’s important to recognise the significant work that all funds have done to support their members through a very challenging year,” said SuperRatings Executive Director Kirby Rappell.
“In a highly competitive field, we decided that QSuper was the fund that performed most strongly across the key criteria of investment performance, fees, member services, financial advice and insurance, and fund governance.”

“Congratulations to the team at QSuper on a fantastic effort. It was a strong field this year and we note the high calibre of all award winners, with the quality of their offerings shining through the pandemic.”

“A lot has changed in super, and there are even more changes to come. We should always be focused on improvement, but we shouldn’t lose sight of the incredible outcomes being produced by a large number of funds, both for their members and the retirement system as a whole. Despite the uncertainty, there is every reason to be positive about super.”

 

Congratulations to all of the finalists for this year’s SuperRatings and Lonsec Fund of the Year Awards Dinner. A full list of the awards is available below.

SuperRatings Fund of the Year Award

Winner

QSuper
 
 
 
 
 
 
 
 

SuperRatings MySuper of the Year Award

Awarded to the fund that has provided the Best Value for Money Default Offering.

Winner
UniSuper

Finalists
AustralianSuper
BUSSQ
CareSuper
Cbus
Equip
HESTA
QSuper
Sunsuper
TelstraSuper
UniSuper

SuperRatings MyChoice Super of the Year Award

Awarded to the fund with the Best Value for Money Offering for Engaged Members.

Winner
Sunsuper

Finalists
AustralianSuper
Aware Super
Hostplus
Mercer Super Trust
NGS Super
QSuper
Statewide Super
Sunsuper
Tasplan
UniSuper

SuperRatings Pension of the Year Award

Awarded to the fund with the Best Value for Money Pension Offering.

Winner
QSuper

Finalists
AustralianSuper
Aware Super
BUSSQ
Cbus
HESTA
Hostplus
QSuper
Sunsuper
TelstraSuper
UniSuper

SuperRatings Career Fund of the Year Award

Awarded to the fund with the offering that is best tailored to its industry sector.

Winner
Cbus

Finalists
BUSSQ
Cbus
HESTA
Mercy Super
TelstraSuper
Hostplus

SuperRatings Momentum Award

Awarded to the fund that has demonstrated significant progress in executing key projects that will enhance its strategic positioning in coming years.

Winner
Aware Super

Finalists
Aware Super
Cbus
Equip
HESTA
Mercer Super Trust
Sunsuper

SuperRatings Net Benefit Award

Awarded to the fund with the best Net Benefit outcomes delivered to members over the short and long term.

Winner
AustralianSuper & HESTA

Finalists
AustralianSuper
Cbus
HESTA
Hostplus
QSuper
UniSuper

SuperRatings Smooth Ride Award

Awarded to the fund that has best weathered the ups and downs of the market, while also delivering strong outcomes.

Winner
QSuper

Finalists
AustralianSuper
Aware Super
BUSSQ
CareSuper
Cbus
QSuper

Infinity Award

Awarded to the fund most committed to addressing its environmental and ethical responsibilities.

Winner
Local Government Super

Finalists
Australian Ethical Super
CareSuper
Christian Super
Future Super
HESTA
Local Government Super

Lonsec Investment Option Award

Seeks to recognise and highlight the work of asset managers and key players incorporating ESG.

Winner
CareSuper – Sustainable Balanced

Finalists
CareSuper – Sustainable Balanced
Cbus – Growth (Cbus MySuper)
Suncorp Multi-Manager Growth
Sunsuper for Life – Balanced

 

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A lack of clarity around environmental, social and governance (ESG) approaches to investing is creating confusion and making it harder for end investors to choose an investment product that fits their objectives and values.

Leading investment research house Lonsec said that investors relying on pure ESG product scores or labels risk being misled about the true sustainability of the product’s underlying investments.

According to Lonsec analysis, funds that score well on a pure ESG basis do not necessarily score well based on sustainability measures that consider the specific industries and activities the fund is exposed to.

“The traditional ESG approach tends to be more about process and less about outcomes,” said Tony Adams, Lonsec’s Head of Sustainable Investment Research.

“ESG fund managers tend to look at sustainability factors in terms of the risks they pose to a company’s business model. Academic research supports the assertion that companies that follow strong ESG standards are more likely to outperform those that don’t.”

Adams said that while ESG analysis is an important element of a fund manager’s investment approach, it can create confusion for investors looking for investment products that explicitly align with their values.

“In some cases, you can end up with a portfolio that looks very similar to the broader market when it comes to exposure to things like fossil fuels, gambling, tobacco, or deforestation. For many investors, ESG integration might sound good, but in practice it will often fail to meet their expectations.”

Lonsec analysis highlights gap between ESG and sustainability

Data from Lonsec show that 19% of Australian equity managers rated by Lonsec score highly for ESG awareness but score poorly for sustainability. Likewise, 18% of managers fare relatively poorly in ESG awareness, but end up performing well in terms of the sustainability of the fund’s underlying investments.

Relationship between Lonsec’s ESG and Sustainability Scores

Source: Lonsec

Lonsec’s analysis covers 159 Australian equity funds, which are scored separately based on their ESG integration and the underlying ‘goodness’ of their portfolio.

Lonsec’s ESG score is based on the policy and reporting framework of each manager, and how deeply integrated its ESG process is with their investment decision making.

In contrast, Lonsec’s Sustainability Score looks through to the fund’s underlying investments and assesses how well they align with the United Nation’s Sustainable Development Goals (SDGs), as well as how much exposure the fund has—directly and indirectly—to ten controversial industries.

“Most investors, if you asked them, would assume there was a strong correlation between ESG and sustainability,” said Adams.

“That there is such a significant discrepancy demonstrates that we need better communication and better tools to help investors make informed decisions about where they put their money.”

ESG funds must ensure they meet investors’ expectations

If ESG funds wish to be viewed as sustainable, they need to be transparent about the composition of their portfolio and the size of their exposure to unsustainable industries.

“Whether it’s a company or a managed fund, what the investor really wants to know is: what industries and activities am I ultimately investing in and supporting?” said Adams.

“While investors care about a manager’s investment process they are often more concerned about the impact their investment has on society, the planet, and future generations.”

Lonsec’s Sustainability Score helps funds become more transparent by giving financial advisers and end-investors the information they need to build a genuine values-based portfolio.

For fund managers who agree to have their fund scored, Lonsec provides a Sustainability Report detailing the relative success of the fund in supporting the SDGs and minimising exposure to controversial industries. Lonsec’s sustainability research assesses the exposures of individual companies across the entire supply chain, allowing individual investors to make their own decisions about how and where to invest.

Finally, Lonsec’s Sustainability Score reflects the net impact of these measures, which is peer ranked and results in a score between 1 and 5 bees.

“We chose bees to represent our Sustainability Score because bees are a symbolic reminder of the importance of biodiversity in maintaining the health of the planet,” said Adams.

“When advisers and investors see 5 bees next to a fund’s name, we want them to associate that fund with the most sustainable investment outcomes in the market.”

Sustainability issues not always black and white

Sustainable investing is about balance. Avoiding every company with a positive carbon footprint is not necessarily good for our portfolios or humanity. The purpose of Lonsec’s sustainability research is to create transparency so investors can make informed decisions.

“We can all identify contentious activities, but whether or not to exclude them completely from our portfolio is a different matter,” said Adams.

“For example, a company like Woolworths is primarily involved in food production and distribution, but it also sells alcohol and tobacco products. Investors will have different views, but we can make sure they know which businesses are exposed to which industries, and how big their exposure is.”

Lonsec’s Sustainability Score exposes the truth about a fund manager’s holdings, helping investors build better portfolios without an ESG black box. As advisers and investors become more educated on the differences between sustainable investing methodologies, fund managers will need to take the lead on transparency and an honest conversation or be left behind.

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In a financial year that saw a bull market turn into a sharp selloff followed by a recovery, super funds were rocked by a level of volatility not seen since the financial crisis a decade ago.

As funds finalise their reporting for June 2020, the fallout from the Covid-19 crisis is clear, but far from the sea of red that members and commentators may have expected back in March. For members invested in any of the top 15 performing balanced options, the past year has netted a slim but positive return compared to the estimated median return of -1.2%.

According to data from leading research house SuperRatings, Suncorp was the top returning fund over the 12 months to the end of June, with the Suncorp Multi-Manager Growth Fund returning 3.8%. This was followed by BUSSQ and Australian Ethical Super, whose balanced options returned 2.5% and 2.4% respectively.

Top 10 SR50 Balanced Index options over 12 months

* Interim return
Source: SuperRatings. Returns to end June 2020.

While it is important to acknowledge those funds that have outperformed during the Covid-19 pandemic to date, members should bear in mind that long-term performance is what really counts.

Over 10 years, the top performers are AustralianSuper, whose balanced option has returned 8.8% p.a., followed closely by UniSuper and Hostplus. Performance for the median balanced option continues to hold strong, returning an estimated 7.6% over the decade to 30 June 2020.

Top 10 SR50 Balanced Index options over 10 years

Source: SuperRatings. Returns to end June 2020.

“Importantly, over the long term, returns remain very healthy,” said SuperRatings Executive Director Kirby Rappell. “Super is a long-term game, so members should avoid chasing short-term results and ensure they are invested in a quality fund with the right investment strategy that is well positioned to deliver for their needs over the course of their working life.”

Interestingly, only half of the top performing funds over 12 months were among the top performing funds over 10 years, highlighting the difficulty for investment strategies to perform well in differing market conditions over a longer term.

“It was pleasing to see 15 out of the 50 options in the SR50 Balanced Index generate a positive return in the 2019-20 financial year, which speaks to the quality of funds available to members,” said Mr Rappell.

“Managing risks while delivering a positive return in this environment has been a real challenge, and this is likely to continue through the rest of 2020.”

According to SuperRatings, given the success of super over the past 10 years in accumulating wealth, members will feel the bumps more when markets go down.

“Prior to Covid-19, we saw the industry average account balance rise over $100,000, compared to around $30,000 during the GFC,” said Mr Rappell.

“This means that, on an absolute basis, members will see their balance move around a lot more than they have previously. Funds have done an excellent job of both managing risk and educating their members on these issues, but more can be done in this space.”

QSuper delivered the best return to risk ratio of its peers over the 7 years to 30 June 2020. While CareSuper, Cbus, MTAA, VicSuper and AustralianSuper delivered a higher return over this period, they did so at a slightly higher level of risk.

Top 10 SR50 Balanced Index options over 7 years ranked by risk and return

OptionRankingReturn % p.a.
QSuper – Balanced18.0%
BUSSQ Premium Choice – Balanced Growth27.9%
CareSuper – Balanced38.1%
Cbus – Growth (Cbus MySuper)48.5%
MTAA Super – My AutoSuper58.0%
VicSuper FutureSaver – Growth (MySuper) Option68.2%
Catholic Super – Balanced (MySuper)77.8%
First State Super – Growth88.0%
AustralianSuper – Balanced98.8%
Media Super – Balanced107.7%

Source: SuperRatings. Returns to end June 2020. Risk and return ranking based on Sharpe ratio.

 

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We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

Lonsec has partnered with BT Financial Group to make its suite of Listed and Retirement Managed Portfolios available on the BT Panorama platform.

BT Panorama users now have access to all three of Lonsec’s Managed Portfolios, with the Multi-Asset Managed Portfolios already available on the platform.

“We’re very pleased to partner with BT to enable their users to leverage Lonsec’s investment knowledge and resources by utilising our full suite of Managed Portfolios,” said Lonsec CIO Lukasz de Pourbaix.

“This has been the most challenging market we’ve seen in a generation. For financial advisers and their clients, it really emphasises the need for professionally managed investment solutions that can manage risks and take advantage of opportunities as they arise.”

Lonsec’s full suite of Managed Portfolios are also available on the Netwealth, HUB24 and Macquarie platforms. Lonsec’s Listed Managed Portfolios are available on Praemium’s platform, along with Lonsec’s Core and Income Separately Managed Accounts (SMAs).

Lonsec’s portfolios harness the depth and breadth of Australia’s leading research house, incorporating dynamic asset allocation combined with an active approach to investment selection. They are also underpinned by Lonsec’s minimum quality criteria, which selects from a pool of funds rated ‘Recommended’ or higher by Lonsec’s investment research team.

Lonsec’s Listed Managed Portfolios provide investors with capital growth and income by investing in exchange-traded securities and individual stocks across a range of asset classes. Lonsec’s Retirement Managed Portfolios are objectives-based and focused on delivering an attractive and sustainable level of income.

Lonsec’s Multi-Asset portfolios are designed for investors seeking a diversified portfolio aimed at generating growth. They invest across a diversified range of Australian equities, global equities, property, infrastructure, fixed interest, and alternatives.

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Important information: Any express or implied rating or advice is limited to general advice, it doesn’t consider any personal needs, goals or objectives.  Before making any decision about financial products, consider whether it is personally appropriate for you in light of your personal circumstances. Obtain and consider the Product Disclosure Statement for each financial product and seek professional personal advice before making any decisions regarding a financial product.