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.

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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.

Super funds set to finish the financial year on a high

SuperRatings has released preliminary performance figures for superannuation fund performance for the period to 30 June 2021, with member accounts on track to balloon by over $300 billion.

Though the financial year isn’t quite over yet, and all eyes are on the government’s response to the latest COVID-19 outbreak, markets have continued to rebound strongly to date.

According to SuperRatings’ forecasts of performance for June, the median balanced option rose an estimated 1.2% over the month. Positive performance estimates were also released for the median growth option at 1.6% and the median capital stable option delivered an estimated 0.5%.

Over the 2020-21 financial year, the median balanced option is on track to deliver a return of 17.1%, the second highest figure since 1992. The key drivers of this result have been a rapid recovery in domestic and global equity markets since falls of 20-30% at the outset of the pandemic and strong listed property returns.

Accumulation returns to June 2021

Financial Year Calendar Year 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index 17.1% 7.9% 7.6% 8.5% 7.9% 8.2%
SR50 Growth (77-90) Index 21.5% 9.9% 8.9% 9.8% 8.8% 9.1%
SR50 Capital Stable (20-40) Index 7.2% 3.0% 4.3% 4.6% 4.7% 5.3%

Source: SuperRatings estimates

Pension returns were also positive in June. The median balanced pension option returned an estimated 1.4% over the month and 18.6% over the financial year to date. The median pension growth option returned an estimated 1.7% and the median capital stable option gained an estimated 0.6% through the month.

Pension returns to June 2021

Financial Year Calendar Year 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index 18.6% 8.3% 8.2% 9.4% 8.5% 9.1%
SRP50 Growth (77-90) Index 23.2% 10.5% 9.6% 10.7% 9.7% 10.2%
SRP50 Capital Stable (20-40) Index 7.9% 3.3% 5.0% 5.2% 5.2% 5.8%

Source: SuperRatings estimates

Strong performance over time

The chart below shows the return to the median balanced option over each financial year since the inception of the superannuation system, as well as the average return over this complete period. Over the 12 months to 30 June 2021 a forecast of 17.1% is displayed for the median balanced option based on SuperRatings’ SR50 Balanced (60-76%) Index.

A year ago, it would have been hard to believe that the typical balanced option would be delivering a near record return for the 2021 financial year. Since 1992, the benefits delivered by super funds are clear, with an average return of 7.4% each year. This is over 2% per annum ahead of fund objectives and demonstrates the value added to everyday Australians over the long term. The way in which funds have weathered the COVID-19 storm also shows the resilience of funds’ portfolios, as well as the levers they have in place to protect members when the market ride becomes bumpy.

Funds recover from initial pandemic impacts

Super funds continue to build members’ wealth, with the median balanced option fund adding more than 140% over the past 15 years, while members in growth options have seen their savings grow by almost 150%.

This is despite the significant drawdowns members experienced during February and March of 2020, with balanced options recovering by November 2020 and growth options by December 2020. We found that a member who had a balance of $100,000 in January 2020 and switched to cash from balanced or growth at the end of March would now be around $20-25,000 behind their position if they had not switched. This again highlights the problems with trying to time the market.

Over the last fifteen years, the median balanced option has risen substantially, with a balance of $100,000 in June 2006 accumulating to $243,181, more than doubling in size. Growth members have experienced an even stronger result, with a similar starting balance growing to $248,576.

Share focused options have delivered the highest returns, with the median Australian shares option growing to $269,269 and the median international shares option growing to $258,472, though these types of options involve greater ups and downs.

Mr Rappell commented: “It’s pleasing to see another solid year of performance for Australian superannuation members, particularly in light of the pandemic environment. As the past year has again shown us, it is important not to get distracted by the ups and downs or short term noise, with these bumps ironing out over time.”

“While we have seen accumulation members fare well over this period, it remains a concerning time for retirees and members on the cusp of retirement for whom the challenges of deriving a meaningful income are very real. With cash and cash like investments such as bonds offering very limited returns and income for these members, we believe it is imperative that we focus on making super more relevant for those people relying on it and this is an area where more attention is needed.”

Funds outperform long-term objectives

Strong performance aside, it’s important to put this into context, funds aim to beat inflation by a certain amount, with targets of CPI + 3% or 3.5% over 10 years being common benchmarks used. Considering our estimate of performance over the 10 year period to 30 June 2021 of 8.2% for the median balanced option, this benchmark is easily being exceeded against an inflation estimate of around 2%.

Mr Rappell said “we continue to encourage members to focus on the long term and emphasise the importance of not trying to time the market, particularly since market uncertainty or the likelihood of ups and downs, is at an all time high. Super funds continue to meet the performance targets they have set over the long run, which should be reassuring to all Australians.”

The RBA board outlined it expects GDP to grow by 4.75% this year and 3.50% in 2022, supported by fiscal measures and accommodative financial conditions, while jobs, inflation, and wage pressures are expected to remain subdued.

Mr Rappell commented “the outlook for the year ahead is challenging to forecast. I expect to see choppy markets continue and hope to see economies and travel pick up as vaccination programs spread. Overall, the long-term story for super continues to be a positive one. I encourage members to set themselves in good stead for the financial year ahead and run a health check on their super. Contact your fund and update your details, insurance cover and beneficiaries and seek advice if you are unsure of anything such as the type of investment option or level of insurance cover suitable for you. A new financial year is a perfect time to organise what is often Australians’ second largest asset after their home.”

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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.

Super fund recovery maintains momentum

May continues the recovery in superannuation with another month of steady performance figures, as confidence remained high despite lagging vaccinations and snap lockdowns.

According to SuperRatings’ data, the median balanced option rose an estimated 1.1% in May, while the median growth option rose an estimated 1.3% and the median capital stable option rose an estimated 0.6%. Over the 2020-21 financial year to date, the median balanced option has returned 15.8%, and positions funds to end the financial year on a high after the rebound in financial markets in the second half of 2020 and strong growth momentum through the start of 2021.

Accumulation returns to May 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index 15.8% 17.0% 7.6% 8.0% 7.7% 8.0%
SR50 Growth (77-90) Index 19.8% 21.1% 8.9% 9.1% 8.6% 8.9%
SR50 Capital Stable (20-40) Index 6.7% 7.1% 4.3% 4.4% 4.6% 5.1%

Source: SuperRatings estimates

ension returns were also positive in May. The median balanced pension option returned an estimated 1.3% over the month and 17.1% over the financial year to date. The median pension growth option returned an estimated 1.4% and the median capital stable option gained an estimated 0.6% through the month.

Pension returns to May 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index 17.1% 18.4% 8.3% 8.8% 8.3% 8.9%
SRP50 Growth (77-90) Index 21.0% 22.2% 9.5% 9.9% 9.6% 9.9%
SRP50 Capital Stable (20-40) Index 7.4% 8.1% 5.0% 5.1% 5.1% 5.7%

Source: SuperRatings estimates

The chart below shows the return to the median balanced option over each financial year since the inception of the superannuation system. As well as the average return over this complete period.

It is a good news story for Australian superannuation members despite the impacts of the pandemic, with a strong market recovery supporting an estimated return of 16.0% for the financial year to 11 June 2021. The benefits of the system are reinforced with the average return of 7.3% irrespective of the ups and downs we have seen due to market events such as the Global Financial Crisis and COVID-19.

*Note: 2020/21 estimate is as at 11 June 2021

“As we reflect on the financial year to date, May is the eleventh month in a row we have seen a positive result for the median balanced fund and we are on track to see a double-digit return for the year ending 30 June 2021.” Said Mr Rappell.

The RBA left the cash rate unchanged at a record low of 0.1% during its June meeting, as widely expected. With policymakers reaffirming their commitment to maintaining highly supportive monetary conditions until at least 2024 when actual inflation is expected to be within the 2-3% target.

“While strong performance this year is pleasing, market volatility prevails and we are erring on the side of caution in terms of the future outlook, with equity markets likely to provide investors with a bumpy ride. Further with rates remaining at record lows, more defensive assets such as cash and bonds have delivered meagre returns, which is impacting retirees’ incomes.” Continued Mr Rappell.

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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.

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For more information, contact:

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

A year on from the start of the COVID-19 pandemic, super funds continue to enjoy in the market recovery as vaccine rollouts and the return to more normal economic conditions lift confidence.

Members have welcomed the return to a more stable footing, but markets are still more volatile compared to the pre-COVID-19 situation. Much also depends on the speed and efficacy of vaccination programs globally, with some regions facing delays and logistical challenges.

According to SuperRatings data, the median balanced option rose an estimated 0.7% in February and the median growth option rose an estimated 1.1%, while the median capital stable option fell an estimated 0.1%. Over the 2021 financial year to date, the median balanced option returned 9.7%, reflecting the strength and speed of the post-pandemic recovery, which has been extended through the start of 2021.

The federal government said Australian health professionals will soon be delivering over 500,000 vaccinations a week, with general practitioners set to assist in the COVID-19 vaccine rollout in coming weeks. Australia will keep its international borders shut for at least another three months.
“Super has notched up another positive month, thanks to the vaccine narrative and the relative strength of Australia’s economic recovery, which has exceeded expectations,” said SuperRatings Executive Director Kirby Rappell.

“Markets are still bumpy and members should not be surprised to see the value of their super fluctuate over the course of 2021. With the severe shock of the pandemic now behind us, the challenge will be gradually transitioning away from government support programs and getting households and businesses back on a sustainable footing.”

Accumulation returns to end of February 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 12.0% 7.4% 7.0% 9.2% 7.9% 8.2%
SR50 Balanced (60-76) Index 9.7% 5.9% 6.1% 8.0% 7.1% 7.6%
SR50 Capital Stable (20-40) Index 4.1% 2.0% 3.7% 4.5% 4.4% 4.8%

Source: SuperRatings estimates

Pension returns were also positive in February. The median balanced pension option returned an estimated 0.6% over the month and 10.3% over the financial year to date. The median pension growth option returned an estimated 1.1%, whereas the median capital stable option was down an estimated 0.2% through the month.

Pension returns to end of February 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 13.1% 7.9% 7.5% 10.1% 8.7% 9.1%
SRP50 Balanced (60-76) Index 10.3% 6.2% 6.7% 8.8% 7.8% 8.3%
SRP50 Capital Stable (20-40) Index 4.4% 2.3% 4.2% 5.2% 4.9% 5.6%

Source: SuperRatings estimates

The pace of Australia’s economic recovery was reflected in the recently released GDP figures for the December 2020 quarter, which showed growth of 3.1%, taking the yearly rate from -3.7% to -1.1%. The result marked the second straight strong quarter of growth, helped by high levels of monetary and fiscal stimulus.

The February and March earnings season revealed a corporate environment still impacted by COVID-19, with earnings down in aggregate and companies opting to hold more cash, although the lift in dividends has been a key positive development for Australian investors.
According to SuperRatings, the pandemic has been a critical case study for super funds and will inform the way they manage risks and respond to member needs into the future.

“A lot is happening in super at the moment, from regulatory change to further consolidation,” said Mr Rappell.
“Funds have shown they are able to adapt to rapid changes on these fronts, while also managing risks and attending to the needs of members through a challenging market. The pandemic period will serve as a masterclass in change management for superannuation that will lead to a more robust and agile industry in the long run.”

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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
E: Kirby.Rappell@superratings.com.au

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.”

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 © 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.

The recovery in superannuation continues as lockdown conditions gradually ease across the country and Australians prepare for a relatively normal summer, with fewer restrictions on gatherings and business operations.

According to estimates from leading superannuation research house SuperRatings, the median balanced option returned 0.5% in October, while positive market movements in November point to continued momentum.

However, the median balanced option remains down -0.8% over the 12 months to the end of October, with members yet to fully recoup their losses since the height of the market turmoil in March. According to SuperRatings, while super has bounced back strongly in the second half of 2020, members should be wary of further market volatility as the global pandemic is brought under control.

“The super recovery is ongoing but has been faster and stronger than expected to date,” said SuperRatings Executive Director Kirby Rappell.

“There are clearly still significant risks and uncertainties, and we expect more market volatility heading into 2021, but overall members have reason to be reassured by the performance and resilience of funds’ portfolios this year.”

According to SuperRatings’ data, the median balanced option returned -2.5% from January to October, but posted a strong recovery in the second half of the year.

The median growth option returned an estimated 0.6% in October and -1.4% over 1 year, while the median capital stable option returned an estimated 0.3% in October and 0.5% over 1 year.

Accumulation returns to end of October 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 -3.5% -1.4% 5.0% 6.5% 7.2% 7.7%
SR50 Balanced (60-76) Index -2.5% -0.8% 4.7% 6.0% 6.6% 7.3%
SR50 Capital Stable (20-40) Index -0.2% 0.5% 3.4% 3.9% 4.4% 4.9%

Source: SuperRatings estimates

Pension returns fared modestly better over the month. The median balanced pension option rose an estimated 0.6% in October and -1.0% over 1 year. The median pension growth option delivered an estimated 0.7% in October and -1.5% over 1 year, and the median capital stable pension option returned an estimated 0.3% in October and 0.5% over 1 year.

Pension returns to end of October 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 -3.7% -1.5% 5.6% 7.2% 8.0% 8.6%
SRP50 Balanced (60-76) Index -2.5% -1.0% 5.2% 6.5% 7.2% 7.9%
SRP50 Capital Stable (20-40) Index -0.2% 0.5% 4.0% 4.4% 4.9% 5.6%

Source: SuperRatings estimates  

Australian shares bucked the global trend in October to post a 1.9% return as an easing of restrictions, low COVID-19 case numbers, and a highly supportive federal budget bolstered sentiment. Australia was the bright spot amid a resurgence in cases in Europe and a tense US presidential election that fuelled additional volatility.

“Australia’s success comes down to three things: our response to containing the virus, the extraordinary scale of the budget measures, and our superannuation system, which serves as an additional stabiliser to the economy,” said Mr Rappell.

“Looking ahead, it really depends on what a ‘COVID-normal’ world looks like. Developments on the vaccine front are very promising, but things are still uncertain in terms of how we reopen safely and how long this will take. There will still be ups and downs heading into 2021.”

Range of fees between top and bottom quartile funds

Accumulation fees on a $50k account balance Fee as % of balance Calculated fee Member fee Admin fee Investment related fees & costs
Top quartile 1.0% $513 $52 0.11% 0.55%
Median 1.1% $571 $78 0.25% 0.75%
Bottom quartile 1.4% $695 $92 0.52% 0.89%

Fees used in the analysis are as at 30 Sep 2020 using most recent data available to SuperRatings at the time of preparation. Fees includes percentage-based administration fees, member fees, investment management fees (incl. performance-based fees), indirect cost ratios (ICRs) and taxes, but exclude any applicable employer rebates.

The figures in the table are quartiles across the industry for each item, so the calculated fee won’t necessarily reflect the sum of the other items for a $50k balance. But in general the calculated fee represents the total fee calculated based on the member fee, % admin fee and investment related fees and costs.

The top quartile represents the cheapest 25 percent of funds in terms of fees, while the bottom quartile represents the most expensive 25 percent. The median represents the fund that sits in the middle.

The table shows a considerable range in fees being charged by funds across the market, with the most expensive quartile of funds charging $695 or more, compared to $513 or less for the least expensive quartile.

Members should not be single-minded about fees, but it is important to know where your fund sits and whether you are getting value. If your fund’s fees are higher than the median, it might be worthwhile checking your fund’s long-term performance and the suite of benefits it provides to see if the higher fees are justified.

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 has released its top-rated KiwiSaver schemes for 2021. Eight providers were awarded the ‘Platinum’ rating for 2021, with competition continuing to intensify among the Platinum and Gold bands.

SuperRatings’ assessment criteria considers five key factors, including investments, fees, member servicing, scheme administration and governance. Schemes awarded a Platinum rating are well balanced across all key assessment criteria. We believe these schemes are well placed to deliver strong value for members and enhance retirement outcomes relative to their peers.

“The past year has seen all corners of the industry in a state of flux, with the ability to anticipate and adapt to change front and centre, while the challenges of executing this objective have been clear. COVID-19 has impacted investment markets and schemes’ portfolios, as well as business operations, with the complete picture still to emerge.”

“Fees remain a key focus in the New Zealand market, though it is pleasing to see the notion of ‘value for money’ continuing to gain traction. Furthermore, we will be closely monitoring the outcomes of the default provider review, with the tender process currently underway” said SuperRatings Executive Director Kirby Rappell.

“SuperRatings continues to believe the best way to determine value for money involves consideration of investment earnings, as well as the fees charged. We refer to this as the ‘Net Benefit’ outcome”.

Through our Net Benefit research, which models the dollar outcome a member receives in their account we have found that switching fund type can have a significant impact on a member’s retirement balance. With the proposed movement to a Balanced default fund pleasing to see instead of the current Conservative Fund type. In addition, sitting within a strong KiwiSaver Scheme on a Net Benefit basis is also important.

Switching between fund types across the market was elevated during the onset of the pandemic in March, with provision of information regarding the impacts of switching crucial to support member understanding. Interestingly, similar to the GFC we note there was lower switching between schemes during this time of volatility.

It has been pleasing to see schemes proactively engaging with members during this time of heightened uncertainty, with schemes offering additional online content, as well as webinars to provide members with reassurance regarding areas such as investment markets, switching funds and how their balance has been impacted.

We continue to see a rise in the provision of a range of channels through which members can contact their scheme, such as over the phone, click2chat and mobile apps. We note that contact centres were under significant pressure during the pandemic period with schemes having to essentially move these to the virtual environment quickly, which considering the efforts involved, went rather well based on our review of schemes this year.

The role of sustainable investing and ESG factors continues to gain prominence across the KiwiSaver market, with this being called out specifically through the default tender review. We see a range of strategies being pursued here and are supportive of a consideration of these factors. Interestingly, in Australia we have found that strong outcomes can be delivered through investment strategies with an ESG focus and this doesn’t have to come at a higher cost.

Overall, we see the KiwiSaver market maturing and look forward to seeing how schemes continue to navigate the uncertain environment we are operating in, with a focus on delivering strong retirement outcomes for members.

SuperRatings’ Scheme Rating Criteria

 

New Zealand’s Top Rated Schemes

Platinum Rated Schemes

ANZ Default KiwiSaver Scheme
ASB KiwiSaver Scheme
BNZ KiwiSaver Scheme
Fisher Funds KiwiSaver Scheme
Fisher Funds TWO KiwiSaver Scheme
Mercer KiwiSaver Scheme
Milford KiwiSaver Plan
New Zealand Defence Force KiwiSaver Scheme

Gold Rated Schemes

AMP KiwiSaver Scheme
ANZ KiwiSaver Scheme
Aon KiwiSaver Scheme
Booster KiwiSaver Scheme
Generate KiwiSaver Scheme
Kiwi Wealth KiwiSaver Scheme
OneAnswer KiwiSaver Scheme
Simplicity KiwiSaver Scheme
Westpac KiwiSaver Scheme

 

Release ends

 

About SuperRatings

SuperRatings Pty Ltd ABN 95 100 192 283 AFSL No. 311880 (SuperRatings) is a superannuation research house with specialist areas of expertise that was originally established in 2002. From 1 July 2011, SuperRatings became a fully owned subsidiary of the entity currently registered as Lonsec Fiscal Holdings Pty Ltd, a privately owned entity with a multi-brand strategy of providing leading financial services research and investment execution. SuperRatings believes that professional financial services institutions and members need informed opinions on the best superannuation and pension financial products. To meet this need, SuperRatings has in place an experienced research team, which draws on a robust research process to undertake in-depth assessment of superannuation financial products. No fee is paid by superannuation and pension funds to SuperRatings for reviewing and rating superannuation and pension financial products.

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.