Higher than expected inflation data has shifted the discussion around the outlook for interest rates in April, resulting in falling equity and fixed interest markets both in Australian and globally. This was reflected in superannuation returns as funds reported their first negative monthly return since October 2023. Leading superannuation research house SuperRatings estimates that the median balanced option fell by -1.6% over April.

“Sticky inflation caught up with investment markets in April as the reality of interest rates being higher for longer was being digested, and this flowed through to super returns” commented Kirby Rappell, Executive Director of SuperRatings. “But we encourage members to remember that this is the first time in six months that superannuation balances have fallen, and funds are still up over 7% for the financial year with two months remaining.”

The median growth option fell by an estimated -1.7% for the month, while the median capital stable option, with higher allocation to defensive assets fell by a more modest -1.0%.

Accumulation returns to 30 April 2024

  Monthly FYTD 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index -1.6% 7.1% 8.1% 5.3% 6.2% 6.6% 7.0%
SR50 Capital Stable (20-40) Index -1.0% 4.4% 4.5% 2.7% 3.3% 3.7% 4.4%
SR50 Growth (77-90) Index -1.7% 8.5% 9.9% 6.2% 7.6% 7.9% 8.2%

Source: SuperRatings estimates

Pension returns similarly fell over April, with the median balanced pension option falling by an estimated -1.9%. The median capital stable pension option is estimated to have fallen by -1.1% over the month while the median growth pension option is estimated to fall -2.0% for the same period.

Pension returns to 30 April 2024

  Monthly FYTD 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SRP50 Balanced (60-76) Index -1.9% 7.7% 8.9% 5.8% 6.9% 7.3% 7.7%
SRP50 Capital Stable (20-40) Index -1.1% 4.8% 5.0% 2.9% 3.6% 4.1% 4.9%
SRP50 Growth (77-90) Index -2.0% 9.4% 10.9% 6.7% 8.2% 8.6% 8.9%

Source: SuperRatings estimates

The trajectory for interest rates continues to drive the outlook for returns and while the Reserve Bank of Australia kept interest rates on hold this week, the prospect of interest rates remaining higher for longer remains very real. “We continue to believe there will be ups and downs over the coming months, however funds have consistently demonstrated their ability to navigate changing markets and provide strong long term outcomes for members. Setting and sticking to a long term strategy remains the best approach to achieving long term success and we encourage any member thinking of changing their strategy to seek advice from their fund or a trusted financial adviser” concluded Mr Rappell.

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Super funds once again delivered a boost to members in March with another month of investment gains. Leading superannuation research house SuperRatings estimates that the median balanced option generated a return of 1.9% for March. This takes the estimated return for the first 9 months of the financial year to 8.8%, making a double digit return a possibility depending on outcomes for the final quarter.

Super returns have proven resilient over the year so far with consistent positive performance driven by strong share markets both in Australia and internationally. “We have continued to see fund balances grow, despite ongoing uncertainty over the inflation outlook both here and abroad” commented Kirby Rappell, Executive Director of SuperRatings.

The median growth option gained an estimated 2.3% for the month, while the median capital stable option also rose by an estimated 1.1%.

Accumulation returns to 31 March 2024

  Monthly FYTD 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index 1.9% 8.8% 11.2% 6.5% 6.9% 7.1% 7.3%
SR50 Capital Stable (20-40) Index 1.1% 5.4% 6.3% 3.3% 3.7% 4.0% 4.6%
SR50 Growth (77-90) Index 2.3% 10.5% 13.40% 7.7% 8.4% 8.4% 8.5%

Source: SuperRatings estimates

 

Pension returns also grew over March, with the median balanced pension option increasing by an estimated 2.2%. The median capital stable pension option is estimated to have grown by 1.2% over the month while the median growth pension option is estimated to increase by a 2.6% for the same period.

Pension returns to 31 March 2024

  Monthly FYTD 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index 2.2% 9.9% 12.5% 7.0% 7.7% 7.8% 8.1%
SR50 Capital Stable (20-40) Index 1.2% 6.0% 7.1% 3.5% 4.0% 4.4% 5.1%
SR50 Growth (77-90) Index 2.6% 11.6% 15.0% 8.3% 9.2% 9.2% 9.4%

Source: SuperRatings estimates

Reflecting on Superannuation balances rebound since COVID

The following chart displays the change in the superannuation balance of a member who had $50,000 in their super account at the beginning of January 2020, before the COVID pandemic began to influence markets.

Assuming no additional contributions or deductions other than investment fees and taxes, a member who had $50,000 invested in the median balanced option at the beginning of 2020 would now have $64,406, while a member investing solely in an International Shares option would have $74,888 and a member who invested in cash would have a balance of $53,244. When measured from the depths of the COVID pandemic, the median international shares option within a super fund has returned 69% or 17% per annum since the lowest point of the pandemic, further highlighting the need for a long-term view on super.

While investing in international shares has provided the highest growth, what can also be seen is the additional uncertainty in account balance each month with the international share index displaying the largest ups and downs over the period.

“The COVID pandemic was a major event for financial markets around the world and while balances have recovered, we continue to see greater ups and downs in returns than prior to the pandemic” commented Mr Rappell. “With the benefit of hindsight, it is fair to say that we didn’t expect the strength of the returns experienced since the depths of the pandemic. With a decent chance of strong returns for financial year 2024, most members will be pleased to see their retirement savings growing, however the ups and downs are expected to remain, and we encourage members to focus on long term outcomes when reviewing their retirement settings”.

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Kirby.Rappell@superratings.com.au

Super returns maintained their momentum over the month as confidence that inflation is coming under control continued to build. Leading superannuation research house SuperRatings estimates that the median balanced option generated a return of 1.8% for February.

This brings the return to an estimated 6.7% for the median balanced option after the first 8 months of the financial year, which is a pleasing outcome given market uncertainty. “Superannuation funds have had a strong run since late last year with the positive February result was the fourth consecutive month of gains” commented Kirby Rappell, Executive Director of SuperRatings.

The median growth option gained an estimated 2.3% for the month, while the median capital stable option also rose by an estimated 0.7%.

Accumulation returns to February 2024

  Monthly FYTD 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index 1.8% 6.7% 10.2% 6.5% 6.7% 7.0% 7.0%
SR50 Capital Stable (20-40) Index 0.7% 4.3% 6.2% 3.3% 3.7% 3.9% 4.5%
SR50 Growth (77-90) Index 2.3% 7.9% 12.0% 7.7% 8.1% 8.4% 8.2%

Source: SuperRatings estimates

Pension returns also grew over February, with the median balanced pension option increasing by an estimated 1.9%. The median capital stable pension option is estimated to have grown by 0.7% over the month while the median growth pension option is estimated to increase by a 2.5% for the same period.

Pension returns to February 2024

 

  Monthly FYTD 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index 1.9% 7.5% 11.4% 7.1% 7.4% 7.8% 7.8%
SR50 Capital Stable (20-40) Index 0.7% 4.7% 6.9% 3.6% 3.9% 4.3% 5.1%
SR50 Growth (77-90) Index 2.5% 8.8% 13.4% 8.4% 8.8% 9.1% 9.0%

Source: SuperRatings estimates

“While the trajectory of inflation and central bank interest rates maintains market uncertainty, super funds continue to deliver gains for member balances, supporting stronger retirement outcomes. Super fund returns remain much less volatile than equity markets demonstrating the benefits of diversification and the ability of funds to weather these markets conditions with competitive outcomes for their members.”, continued Executive Director of SuperRatings, Kirby Rappell.

“For those members thinking about changing their investment option it is important to consider how long they will be investing for and the level of risk they are willing to take on. Members should seek advice from their fund or a trusted adviser before making changes to their investment strategy.” Mr Rappell added.

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Kirby.Rappell@superratings.com.au

Following an end of year rally in December, super funds have made a good start to 2024 with leading superannuation research house SuperRatings estimating the median balanced option generated a return of 1.1% in January.

The trajectory of inflation and associated shifts in interest rates remain key areas of conjecture, although they will remain a significant story this year. Funds continue to demonstrate their strong investment capabilities in the face of unpredictable markets with the positive return pushing estimated financial year to date returns to 4.9% with five months left in the year.

The median growth option increased by an estimated 1.3% in January, while the median capital stable option delivered a modest 0.5% return to members.

Accumulation returns to January 2024

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index 1.1% 7.6% 6.2% 6.8% 6.8% 7.0%
SR50 Capital Stable (20-40) Index 0.5% 5.0% 2.9% 3.7% 3.9% 4.6%
SR50 Growth (77-90) Index 1.3% 9.1% 7.4% 8.3% 8.2% 8.3%

Source: SuperRatings estimates

Pension returns also rose over January, with the median balanced pension option up an estimated 1.1%. While an increase of 1.4% was estimated for the median growth option and a smaller 0.5% for the median capital stable pension option.

Pension returns to January 2024

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index 1.1% 8.6% 6.8% 7.6% 7.7% 7.8%
SR50 Capital Stable (20-40) Index 0.5% 5.5% 3.2% 4.0% 4.4% 5.1%
SR50 Growth (77-90) Index 1.4% 10.0% 8.1% 9.1% 9.0% 9.1%

Source: SuperRatings estimates

“Funds continue to capitalise on the strong momentum in markets as they enter 2024. While returns so far are looking more modest than last year’s strong rebound, super funds remain well positioned to deliver a good result to members in the face of ongoing uncertainty”, commented Executive Director of SuperRatings, Kirby Rappell. “With continued ups and downs expected, we encourage members to remain focused on long term performance.”

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Kirby.Rappell@superratings.com.au

Expectations of peak inflation drove positive returns across most sectors of the market in November, leading to a bounce in returns following the subdued earnings reported between August and October. Leading research house SuperRatings estimates the median balanced option will deliver a return of 3.1% for the month of November.

“Despite the uncertainties around inflation, markets, and rates, we have seen funds recording strong returns into Christmas.” commented Kirby Rappell, Executive Director of SuperRatings.

The median growth option similarly experienced a strong month with an estimated 3.5% gain, while the median capital stable option experienced a more modest return of 2.0% owing to a lower exposure to shares.

Accumulation returns to November 2023

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index 3.1% 4.6% 5.3% 6.4% 6.5% 6.6%
SR50 Capital Stable (20-40) Index 2.0% 3.1% 2.2% 3.5% 3.7% 4.3%
SR50 Growth (77-90) Index 3.5% 5.3% 6.5% 7.7% 7.9% 7.8%

Source: SuperRatings estimates

November’s strong performance was also reflected in pension returns, with the median balanced pension option returning an estimated 3.4%. The median growth option is estimated to see a gain of 3.9% for the month, while the median capital stable pension option is estimated to deliver a 2.3% return.

Pension returns to November 2023

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index 3.4% 5.0%  5.8%  7.2%  7.5% 7.5%
SR50 Capital Stable (20-40) Index 2.3%  3.4%  2.7%  3.9%  4.1% 4.5%
SR50 Growth (77-90) Index 3.9% 6.0%  6.8%  8.5%  8.7%  8.6%

Source: SuperRatings estimates

The estimated gains in November are set to recover most of the losses over the last few months, setting up a modest, but positive, scene for most members as they approach the halfway point of the financial year. SuperRatings estimates the median fund will provide members with a 1.0% gain for the first 5 months of the financial year.

Despite modest returns over the second half of the year, funds are on track to deliver a 6.8% return after the first 11 months of the calendar year for the median balanced option. While the final result will be dependent on December performance, members are expected to see a reasonable positive return for calendar year, which may be similar to the estimated 6.4% p.a. for the median balanced option since 2000.

“We continue to believe that inflation will be a strong driver of markets in 2024, coupled with softening consumer demand; however, most members should remain reassured by super funds ability to navigate the range of market conditions we’ve seen over the past few years.” commented Mr Rappell. “December has been more mixed for shares so far, however there is still potential for a Santa rally in the second half of the month, and we encourage members to remain focused on their long-term outcomes.”

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Kirby.Rappell@superratings.com.au

Leading research house SuperRatings estimates October will see super funds post negative investment performance for the third consecutive month, with the median balanced option expected to post a return of -1.6% for the month of October.

“We have observed continued uncertainty around global markets and inflation, which has weighed on returns from shares,” commented Kirby Rappell, Executive Director of SuperRatings.

The median growth option similarly experienced a negative return of an estimated -1.9%, while the median capital stable option experienced a more modest decline of -0.8% owing to a lower exposure to shares.

Accumulation returns to October 2023

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index -1.6% 4.2% 5.9% 5.7% 6.3% 6.5%
SR50 Capital Stable (20-40) Index -0.8% 2.9% 2.2% 3.0% 3.5% 4.1%
SR50 Growth (77-90) Index -1.9% 4.9% 7.2% 6.7% 7.6% 7.5%

Source: SuperRatings estimates

October also saw pension returns fall, with the median balanced pension option returning an estimated -1.8%. The median growth option is also estimated to see a decline -2.2% for the month, while the median capital stable pension option is estimated to deliver a -0.9% return.

Pension returns to October 2023

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index -1.8% 4.8% 6.4% 6.3% 7.1% 7.2%
SR50 Capital Stable (20-40) Index -0.9% 3.3% 2.6% 3.3% 3.9% 4.4%
SR50 Growth (77-90) Index -2.2% 5.3% 7.9% 7.5% 8.4% 8.3%

Source: SuperRatings estimates

While data suggests a inflation is moderating, it remains persistently above target and we saw the RBA provide a Melbourne Cup rate rise accordingly. Along with the US Federal Reserve leaving open the possibility of further rate rises to quell their own inflation, the share market rally we have witnessed in November so far may be not be sustainable.

“Despite the uncertain environment of the past quarter, returns remain positive over 1 through to 20 years. Superfunds continue to display strong capabilities in navigating uncertain market environments and members have been experiencing increased levels of ups and downs for some time now” commented Mr Rappell. “Our message to members remains one of focusing on the long term and sticking with their long-term investment strategy. The ups and downs are likely to continue, and members who are thinking about changing their strategy are encouraged to contact their fund, or speak with a trusted adviser, before making any changes.”

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Kirby.Rappell@superratings.com.au

Funds are estimated to post negative returns for the second month in a row in September, with leading research house SuperRatings estimating the median balanced option will return -1.8% for the month, as investors adjust to the increased likelihood of interest rates remaining higher for longer. Despite these challenges, the median balanced option return for the 3 months to 30 September 2023 is estimated to be a modest -0.4% fall.

“We observed an acceleration of the August performance trend in September as both international and Australian equities weighed on returns, with sticky inflation the key concern for markets” commented Kirby Rappell, Executive Director of SuperRatings.

The median growth option fell by an estimated -2.2%, while lower exposure to shares resulted in the median capital stable option delivering a smaller loss of -1.1% for September.

Accumulation returns to September 2023

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index -1.8% 9.0% 6.6% 5.3% 6.3% 6.9%
SR50 Capital Stable (20-40) Index -1.1% 5.1% 2.7% 2.9% 3.5% 4.3%
SR50 Growth (77-90) Index -2.2% 11.0% 8.2% 6.2% 7.8% 8.0%

Source: SuperRatings estimates

Pension returns also fell in September, with the median balanced pension option falling an estimated -1.8%. The median growth option is estimated to decline -2.3% for the month while the more defensive median capital stable pension option is estimated to deliver a -1.2% return.

Pension returns to September 2023

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index -1.8% 10.6% 7.3% 5.9% 7.2% 7.6%
SR50 Capital Stable (20-40) Index -1.2% 5.6% 3.0% 3.2% 3.9% 4.6%
SR50 Growth (77-90) Index -2.3% 12.1% 8.7% 6.9% 8.5% 8.7%

Source: SuperRatings estimates

The trajectory for interest rates and geopolitical tensions are likely to remain as the dominant drivers for superannuation returns over the coming months. While returns fell over the month, relative to the broader market, funds continue to outperform equities due to the benefits of diversification.

“Super funds continue to display strong capabilities in navigating uncertain market environments and members have been experiencing increased levels of ups and downs for some time now” commented Mr Rappell. “Our message to members remains one of focusing on the long term and sticking with their long-term investment strategy. The ups and downs are likely to continue, and members who are thinking about changing their strategy are encouraged to contact their fund, or speak with a trusted adviser, before making any changes.”

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Kirby.Rappell@superratings.com.au

After a positive start to the new financial year, super fund returns faced modest headwinds in August with the median balanced option delivering an estimated return of -0.1% according to leading superannuation research house SuperRatings.

The trajectory for inflation remains a key driver for markets with uncertainty around central bank’s rates pathway remaining front of mind. Both Australian and global equities reported small declines over the month with diversification continuing to benefit members in reducing underperformance.

The median growth option fell by an estimated -0.3%, while lower exposure to shares resulted in the median capital stable option delivering a small positive result, with an increase of 0.1% for August.

Accumulation returns to August 2023

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index -0.1% 7.7% 7.1% 5.7% 6.6% 7.2%
SR50 Capital Stable (20-40) Index 0.1% 4.2% 3.0% 3.1% 3.6% 4.5%
SR50 Growth (77-90) Index -0.3% 9.3% 8.5% 6.6% 8.1% 8.4%

Source: SuperRatings estimates

Pension returns followed a similar trend over the month, with the median balanced pension option falling an estimated -0.1%. The median growth option is estimated to decline -0.2% in August while the more defensive median capital stable pension option is estimated to deliver a 0.1% gain.

Pension returns to August 2023

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index -0.1% 8.7% 7.7% 6.3% 7.5% 7.9%
SR50 Capital Stable (20-40) Index 0.1% 4.7% 3.4% 3.4% 4.1% 4.9%
SR50 Growth (77-90) Index -0.2% 9.8% 9.1% 7.4% 8.9% 9.2%

Source: SuperRatings estimates

“Market uncertainty persists, and we continue to expect monthly fund returns to bounce around” commented Executive Director of SuperRatings, Kirby Rappell, “However, over the long term, we know funds have a strong record of performing above objectives. The key message for most members is ensuring their settings are right for the long term in order to provide dignity in retirement.”

Monitoring investment performance is a good hygiene factor for members and the results of the latest annual performance test were recently released. The test has had a significant impact on MySuper default products over the past three years with the only MySuper product to fail the test this year already being closed to new members. The test was also expanded to a broader range of products this year and members who are invested in a failing product will soon be receiving a letter from their fund. If you do receive that letter, make sure you review your investment option or speak with a trusted adviser to understand why it failed and if it’s still suitable for you.

“We’ve seen a more subdued return for super funds over August, however the strong returns in July mean performance remains positive overall for the new financial year. We encourage members to focus on the longer term and be prepared to see more ups and downs over the coming months” concluded Mr Rappell.

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Equity markets remained strong over June with the superannuation industry closing out the year with returns that more than made up for last year’s losses. Leading superannuation research house SuperRatings estimates that the median balanced option returned 1.2% over the month of June, strengthening an already positive annual return to 8.5% for the year to 30 June 2023. This follows on from the -3.4% return last financial year, demonstrating the industry’s ongoing ability to navigate an uncertain market environment.

Executive Director of SuperRatings, Kirby Rappell said, “While there are significant conversations about interest rate rises, inflation and global uncertainty front and centre within the economy, it is reassuring to see superannuation funds’ ability to deliver a competitive outcome for everyday Australians.”

Mr Rappell continued “While economic pressures are hard to ignore, superannuation continues to perform well on a long-term basis with most funds managing to keep performance in line with the typical CPI+3.0% investment objective over 10 and 30 years. We expect funds may struggle to meet their inflation plus objectives over the short term, particularly as inflation remains elevated; however, super funds have done well to capitalise on the opportunities available to ensure members’ super account balances continue to grow. While the current cost of living is certainly putting pressure on many Australians, superannuation continues to play its part for people’s longer term financial outcomes.”

The median growth option returned an estimated 1.4% over the month, while capital stable options which hold more traditionally defensive assets such as cash and bonds returned 0.3%.

Accumulation returns to June 2023

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index 1.2% 8.5% 7.4% 5.7% 6.8% 7.4%
SR50 Capital Stable (20-40) Index 0.3% 4.5% 3.1% 3.1% 3.7% 4.5%
SR50 Growth (77-90) Index 1.4% 11.1% 9.0% 6.8% 8.2% 8.7%

Source: SuperRatings estimates

Pension returns also ended the financial year strongly, with the median balanced pension option up an estimated 1.3% over June. The median growth option rose by 1.6% while the median capital stable option is estimated to deliver a 0.3% return for the month.

Pension returns to June 2023

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index 1.3% 9.8% 8.2% 6.4% 7.7% 8.3%
SR50 Capital Stable (20-40) Index 0.3% 5.1% 3.7% 3.5% 4.2% 5.1%
SR50 Growth (77-90) Index 1.6% 12.2% 9.6% 7.5% 9.2% 9.4%

Source: SuperRatings estimates

Super Performance Continues to Exceed Targets

The chart below shows that the average annual return since the inception of the superannuation system is 7.1%, with the typical balanced fund exceeding its long-term return objective of CPI+3.0%.

 

This year international equities were the standout performers for super funds, with Australian equities and listed property also supporting the strong performance over the year. Unlisted assets, such as unlisted property, have placed a bit of a drag on returns, with a significant number of funds writing down unlisted valuations. These assets have performed well over the long term and provided crucial diversification within portfolios. More defensive options had a tougher year with smaller allocations to equities and a relatively subdued return from fixed interest, however cash options did provide a small silver lining as returns rose off the back of central bank rate rises.

We continue to emphasise the importance of setting a long-term strategy for your superannuation. Despite the strong performance over the past year, we suggest members remain alert, but not alarmed, and review their longer-term settings, such as whether they are in the most appropriate investment option for their situation and check their fees, when they check their annual statements.

Mr Rappell commented, “12 months ago, we did not anticipate an 8% return for this year and so, many people would see this as a positive. Further, long term returns remaining strong. However, we expect the ups and downs observed over the last 12 months to continue and members should be prepared for their balances to fluctuate. If you are not approaching or in retirement, keep in mind that all market movements in the short term are not likely to be what you are thinking about when you retire in 20 or 30 years time.”

Release ends

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

Stubbornly high inflation and a return to tightening monetary policy by the Reserve Bank of Australia has led to persistent uncertainty in markets over the past year. Superannuation fund returns are expected to be slightly negative over the month, with leading superannuation research house SuperRatings estimating the median balanced option generated a return of -0.2% for May. Despite the uncertain outlook for inflation, we estimate financial year to date returns on a Balanced (60-76) option to be 7.9% as at the end of May. Depending on returns throughout June, super funds are on track to manage a return above inflation for the past 12 months.

The median growth option fell by an estimated -0.3% over May, while the median capital stable option is estimated to decline by -0.2%.

Accumulation returns to May 2023

 

 

  Monthly FYTD 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index -0.2% 7.9% 4.0% 7.4% 5.9% 6.6% 7.3%
SR50 Capital Stable (20-40) Index -0.2% 4.4% 2.6% 3.2% 3.2% 3.7% 4.5%
SR50 Growth (77-90) Index -0.3% 9.6% 5.0% 9.1% 6.8% 7.7% 8.5%

Source: SuperRatings estimates

Pension returns saw a similar fall over May with the median balanced pension option estimated to decline by -0.3%. The median growth pension option is also estimated to fall by -0.3%, while the median capital stable pension option fell by an estimated ‑0.2% over the month.

Pension returns to May 2023

  Monthly FYTD 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index -0.3% 8.6% 4.7% 8.0% 6.4% 7.5% 8.0%
SR50 Capital Stable (20-40) Index -0.2% 4.9% 3.2% 3.7% 3.5% 4.1% 4.9%
SR50 Growth (77-90) Index -0.3% 10.6% 5.5% 9.7% 7.6% 8.6% 9.2%

Source: SuperRatings estimates

Executive Director of SuperRatings Kirby Rappell commented, “While May saw a small fall, funds are currently on track to deliver a return in excess of inflation, so funds have kept the value of members money from diminishing in a high inflation environment, which has been no simple task.”

 

 

In dollar terms, members with $100,000 invested in the Balanced option at the start of July last year would have an estimated $107,833 in their account at the end of May, not accounting for administration fees or any insurance premiums they may pay. Members investing in the more defensive Capital Stable option would have an estimated $104,677 with smaller ups and downs throughout the year, while members that limited their investments to Cash would have a lower overall balance of $102,358 while seeing small gains each month. This demonstrates that fund’s investment strategies are behaving as expected by trading off between account growth and a smooth return, even in such uncertain times.

“Inflation, and the central bank response to inflation, have been the most influential factors for superannuation performance this financial year and we expect this to continue into FY24. Super fund returns have had a bumpy year with markets facing several shocks over the last 11 months; however, funds continue to navigate the challenges well with most accounts seeing growth over the course of the full year”, Mr Rappell continued.

Release ends

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

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.