Leading superannuation research house SuperRatings estimates that the median balanced option fell by -0.9% in May, as funds face into global market headwinds.

The Reserve Bank of Australia increased rates for the second month in a row, signalling that it is facing inflation challenges head on, with a 50 basis point rise applied to the cash rate.

Our estimate of performance for the financial year ending 31 May 2022 has fallen slightly into the red at -0.3%, which is down from a return of 17.8% for the previous financial year.

Executive Director of SuperRatings, Kirby Rappell said, “It is not surprising to see a dampening in the performance of super funds, as the investment environment is very challenging lately. However, the benefits of diversification have been clear as the volatility of super fund returns remains much lower than share markets.”

Mr Rappell continued, “Whilst it has been a pretty challenging time for markets and savings, it is important to put this all into context. Superannuation is a long-term investment and funds have delivered strong performance on average over time. Markets and economies go through ups and downs, and while it’s hard to see your retirement nest-egg bouncing around, it’s important to remain focused on taking a long-term outlook and trying to avoid getting caught up in the noise.”

The median growth option declined by an estimated -1.2%. We saw capital stable options weather the storm somewhat, with a fall of -0.5% due to their greater exposure to bonds and cash.

Accumulation returns to May 2022

Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index -0.9% 1.6% 6.2% 6.5% 6.2% 8.3%
SR50 Capital Stable (20-40) Index -0.5% 0.0% 3.0% 3.6% 3.8% 4.9%
SR50 Growth (77-90) Index -1.2% 2.3% 7.6% 7.7% 7.2% 9.6%

Source: SuperRatings estimates

Pension returns also declined in May, with the median balanced pension option down an estimated -1.1%. While a drop of -1.3% was estimated for the median growth option and a fall of -0.6% was determined for the median capital stable pension option.

Pension returns to May 2022

Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index -1.1% 1.9% 7.1% 7.2% 6.9% 9.4%
SRP50 Capital Stable (20-40) Index -0.6% -0.2% 3.2% 3.9% 4.0% 5.3%
SRP50 Growth (77-90) Index -1.3% 2.4% 8.3% 8.5% 7.9% 10.7%

Source: SuperRatings estimates

Financial Year Performance over Time

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%. The estimated return of -0.3% for the financial year ending 31 May 2022 represents a slight dip and as you can see below, years in which performance has been negative are typically followed by bounce backs in returns and a positive outcome since 1992 is evident on average.

Check your Super

As a new financial year is approaching, now is the perfect time to think about your super and whether you have the settings right for your current situation. Running a health check on your super periodically is a great way to keep your super fit!

  • Investment: check whether the investment option you’re in suits the level of risk, or amount of bumpiness in your balance, you’re comfortable with. Most funds have a risk profile tool on their website that can help you decide which investment option is most suitable for you. Having a look at performance for your fund is also important.
  • Fees: check your fees. The typical total annual fee on a $50,000 account is approximately 1.1% of this balance. See how your fund compares to other funds and the broader market.
  • Insurance: check the type of insurance and level of cover you have. Changes introduced in September 2019 mean that new members under the age of 25 will not automatically be given insurance when joining a super fund and members with a balance of $6,000 or less will not have insurance unless they opt-in. There are tools on fund websites that can help you understand how much cover might be right for you.

Kirby Rappell commented, “Getting the foundations right for your super is the best way to put yourself in good stead for a lifestyle in retirement that meets your needs. It is also beneficial to contact your fund and obtain guidance, support and advice to help set those foundations. Funds also provide access to advice service on investments, insurance, retirement and other topics to help you through the journey. This may be available through your fund directly or by using an adviser that is part of their network. Contact your fund to see what is available and how much it will cost – putting in the effort now can make a big difference to your future self.”

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

Super fund performance continues to experience bumps along the road, with returns falling in April following a small positive return in March. Leading superannuation research house SuperRatings estimates that the median balanced option fell by 1.1% in April.

As inflation challenges become evident, the Reserve Bank of Australia increased rates for the first time since November 2010. The 25 basis point rise now sees the cash rate sitting at 0.35%.

Greater volatility has seen increased pressure on fund returns, with the financial year return for the period ending 30 April 2022 estimated to be 1.2% and further pressure emerging in May.

Kirby Rappell commented, “We have seen a significant pullback in super fund returns this financial year, with 2 months remaining. It is challenging to say whether super funds will end the financial year to 30 June 2022 in the red or the black at this stage, as it could go either way. However, we have seen funds continue to deliver above their investment objectives over the longer term which typically sit around CPI+3.0%. Sticking to a long-term strategy and blocking out short-term noise is as important as ever, with long-term performance being what really matters.

The median growth option declined by an estimated -1.5%. The fall in performance was lower for the capital stable option which invests more in defensive assets such as bonds and cash, with a decline of -0.7% estimated.

Accumulation returns to April 2022

  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% 4.2% 6.5% 6.9% 6.7% 8.2%
SR50 Capital Stable (20-40) Index -0.7% 1.0% 3.2% 3.7% 3.9% 4.9%
SR50 Growth (77-90) Index -1.5% 5.0% 7.8% 8.1% 7.6% 9.4%

Source: SuperRatings estimates

A fall in pension returns was also determined in April, with the median balanced pension option down an estimated 1.4%, similarly the median growth option fell by 1.6%, while the median capital stable option was down an estimated -0.8%.

Pension returns to April 2022

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index -1.4% 4.3% 7.3% 7.5% 7.2% 9.2%
SRP50 Capital Stable (20-40) Index -0.8% 1.0% 3.5% 4.1% 4.2% 5.4%
SRP50 Growth (77-90) Index -1.6% 5.2% 8.3% 8.7% 8.4% 10.4%

Source: SuperRatings estimates

Growth in Super Fund Balances

The ups and downs we have seen across investment markets has led to a bumpy ride for Australia’s super members over the last couple of years.

It’s hard to determine what it all means when looking at returns which are negative one month and positive the next. We remain focused on longer term performance which isn’t as affected by the short-term noise.

Kirby Rappell commented, “Looking back over the last 15 years, the median balanced option has added more than 120%, similarly members sitting in a typical growth option will have seen their retirement nest egg grow by around 121%.

We have seen the greatest increase among Australian Shares and International Shares options of 133% and 132% respectively; however, having your super solely invested in equities will result in more ups and downs due to the greater risk associated, so super funds’ default solutions are designed to better manage this volatility.

These results are despite the drawdowns members experienced following the invasion of Ukraine in February 2022, the impact of the pandemic so far, as well as the GFC period.

We found that a member who had a balance of $100,000 in April 2007 and switched to cash from balanced or growth at the end of March 2020 when the pandemic began would now be around $45-55,000 behind their position if they had not switched.

Kirby Rappell stated, “Making snap decisions can lead to a worse outcome and it’s best to set a long-term strategy and stick to it, as we see markets recover losses from these unexpected events over time.

The chart above shows that over the last 15 years a member in the typical balanced option would have seen a balance of $100,000 in April 2007 grow to $219,775. A member in a growth option fared slightly better with their balance accumulating to $221,058.

Australian Shares options have performed the strongest with the median option rising to $232,095. While the median International Shares option was not far behind at $231,540 despite the uncertainty we have seen across global markets in the last few years.

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

A market bounce in March has supported super fund performance, with the global economy maintaining a reasonable degree of momentum. However, inflation concerns continue to mount as consumers face cost pressures.

The Reserve Bank of Australia kept rates on hold at a low of 0.1% citing ongoing inflation challenges and uncertainty due to the war in the Ukraine, although we see expectations of interest rate rises increasing.

Leading superannuation research house SuperRatings estimates that the median balanced option rose by 1.1% in March. Over the financial year to 31 March 2022, we see an estimated return of 2.4% for the median balanced option.

Kirby Rappell, Executive Director of SuperRatings said, “It is pleasing to see performance recover over the month, as we head towards the end of the financial year. It has been a rockier year for super fund members, although funds seem to be navigating the uncertainty reasonably well. While many Australians feel the impact of natural disasters and increasing inflationary pressures, super continues to support improved long-term financial security for many.”

“I’ve said it before and I will say it again, it is important to focus on the long-term when it comes to your superannuation. The rebound in performance over the March period reinforces this, if a member had switched when they saw performance fall in February, they would have locked in the loss instead of benefiting from the recovery we have now seen.”

The median growth option increased by an estimated 1.6%. The capital stable option, which has less exposure to equity markets in favour of bonds and cash, rose by 0.1%.

Accumulation returns to March 2022

  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% 7.5% 7.5% 6.9% 8.4%
SR50 Capital Stable (20-40) Index 0.1% 3.1% 3.7% 4.0% 4.0% 5.1%
SR50 Growth (77-90) Index 1.6% 9.2% 9.0% 8.8% 7.7% 9.5%

Source: SuperRatings estimates

Pension returns have also risen in March, with the median balanced pension option up an estimated 1.2%, compared to an increase of 1.8% for the median growth option, while performance is estimated to be flat at 0.0% for the capital stable option.

Pension returns to March 2022

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index 1.2% 7.8% 8.3% 8.1% 7.4% 9.4%
SRP50 Capital Stable (20-40) Index 0.0% 3.1% 4.0% 4.5% 4.3% 5.5%
SRP50 Growth (77-90) Index 1.8% 9.6% 9.6% 9.3% 8.5% 10.6%

Source: SuperRatings estimates

We estimate that the return over the financial year to March 2022 is sitting at 2.4% as shown below. Further, since the inception of superannuation, we have only seen 4 negative financial year returns (FY02: -3.1%, FY08: -6.4%, FY09: -12.7%, FY20: -0.8%). The average annual return over this period sits at around 7.2% pa which is ahead of fund objectives which are typically inflation + 3.0% over rolling 10-year periods.

Evidently, while the superannuation road may be bumpy at times, over the longer-term the typical balanced option shows a positive story for Australians.

Kirby Rappell commented, “We are currently on track to end the 2022 financial year in positive territory, depending on how investment markets perform over the June quarter, though performance will be far more muted than that observed in FY2021. While it is pleasing to see performance recover over the month of March, superannuation should be viewed with a long-term lens as there will be ups and downs over shorter term periods.”

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

 

Markets continue to display volatility, with the invasion of the Ukraine heightening already elevated geopolitical tensions and supply chain pressures around the world.

Leading superannuation research house SuperRatings estimates that the median balanced option fell by 0.8% in February. However, over the financial year to date members have seen an estimated return of 1.4% for the median balanced option.

Kirby Rappell, Executive Director of SuperRatings commented, “There is a lot of uncertainty across the globe, which is amplifying ups and downs across investment markets. The latest supply shock following the war between Russia and the Ukraine places further pressure on the cost of living and inflation levels and adds to the likelihood interest rate rises are approaching.”

“We continue to reinforce our previous messages regarding the importance of taking a long-term view when it comes to your superannuation. While the latest global events are extremely concerning, most members are decades away from retirement. This means they have time to recover from any volatility incurred in the short-term.”

The median growth option is down an estimated 1.1%. The capital stable option, which includes more defensive assets like bonds and cash, has fared relatively better, falling only 0.6%.

Accumulation returns to February 2022

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index -0.8% 8.7% 7.4% 7.6% 6.8% 8.5%
SR50 Capital Stable (20-40) Index -0.6% 3.9% 3.8% 4.1% 4.0% 5.1%
SR50 Growth (77-90) Index -1.1% 10.0% 8.6% 8.8% 7.5% 9.5%

Source: SuperRatings estimates

Pension returns have also fallen in February, with the median balanced pension option down an estimated 1.0%, compared to a fall of 1.1% for the median growth option and 0.6% for the capital stable option.

Pension returns to February 2022

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index -1.0% 8.9% 8.2% 8.2% 7.3% 9.4%
SRP50 Capital Stable (20-40) Index -0.6% 4.3% 4.3% 4.7% 4.3% 5.6%
SRP50 Growth (77-90) Index -1.1% 10.1% 9.2% 9.4% 8.3% 10.5%

Source: SuperRatings estimates

Retirees and members approaching retirement are already facing challenges when it comes to deriving a meaningful level of income in retirement, due to ongoing record low interest rate levels. This is compounded by stresses for many of the potential timing of transitioning to retirement.

The key concern for these Australians is the impact of withdrawing their funds at a time when the market has been impacted by some falls in asset prices. Maintaining a long-term view is vital, we encourage people to speak to their fund or financial adviser before making any changes to their superannuation. Knee-jerk reactions could lead to poor outcomes if these aren’t in line with your long-term financial goals.

The typical balanced option has delivered a return of about 8-9% per annum for super and pension members over the last ten years, emphasising that while we have seen negative performance over the month, the longer-term picture remains positive.

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

Research House Lonsec has announced significant changes to its working policies, in response to the insights gained during the COVID shutdown and feedback from its staff.

The necessity of working from home during the pandemic showed that staff were able to successfully carry out their regular daily tasks from remote locations. It has helped redefine what time in the office actually looks like and what purpose it serves.

Whilst Lonsec still believes that genuine one-to-one interaction with colleagues is extremely valuable in building culture, relationships and sharing knowledge and ideas, this does not need to be every day. As a result, the company is permanently moving to a hybrid model, of at least two days in the office each week, and working from home the other days. For some roles, that do not require regular attendance in the office, employees are able to request a move to ‘remote’ locations and this has resulted in some staff now being located in Queensland.

This ability to work from ‘anywhere’ for short periods, has been extended to all staff, with them now having the option to work from anywhere in the world, for up to 4 weeks per year. This has been particularly welcomed by the many Lonsec team members not originally from Australia, or with family overseas. In further recognition of Lonsec’s cultural diversity, allowance has been made for those team members who may celebrate religious festivals other than those typically recognised with an Australian public holiday, by allowing them to work current public holidays and take off dates of their choosing.

Chief Executive Officer, Michael Wright said “considerable thought and time was put into developing our Lonsec@Work program. We believe strongly in supporting our employees’ broader wellbeing and believe that these significant, and industry leading benefits will enable us to attract and retain the best employees, and to genuinely allow staff to choose and enjoy the work life balance that works best for them”.

Release ends

For more information, contact:
Rob Hardy
Robert.Hardy@lonsec.com.au
1300 826 395

Super fund performance was impacted in January following a turbulent month for domestic and global equities, as rising inflation concerns, and looming rate hikes added to investors’ worries.

Supply shortages relating to COVID-19 have put upward pressure on input costs for companies around the world. As a result, we have seen the price of goods and services such as food, automotive fuel, and healthcare bearing the brunt of the impact.

However, these pressures are hoped to ease as supply chains reopen and as we emerge out of the pandemic. Nonetheless, markets have been spooked by the situation which has resulted in a rocky start to the year for super funds.

According to estimates from leading superannuation research house SuperRatings, the median balanced option returned -2.1% in January following the market sell-off, despite some of the initial losses being recovered towards the end of the month reducing the negative impact.

“Falling interest rates have supported rising asset prices and we have seen extremely strong returns over the past 5, 10 and 20 years. Inflation has been within the RBA’s target for much of this time. However, we are seeing an uptick here which has flow on effects for investment markets and the super balances of Australians,” said SuperRatings Executive Director Kirby Rappell.

Mr Rappell continued “Always remember, only about 50% of investments are in shares so your super should be less volatile if you are in a balanced option or a more conservative option. This means that members sitting in these options are not as affected by the ups and downs in stock markets we have seen recently.”

Super funds still have some way to go before recovering from the latest market drop. The median growth option is down an estimated 2.9%. The capital stable option, which includes more defensive assets like bonds and cash, has fared relatively better, falling only 0.9%.

Accumulation returns to January 2022

  YTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index -2.1% 10.9% 8.7% 8.0% 7.4% 8.7%
SR50 Capital Stable (20-40) Index -0.9% 4.5% 4.5% 4.4% 4.3% 5.3%
SR50 Growth (77-90) Index -2.9% 12.6% 10.2% 9.2% 8.3% 9.8%

Source: SuperRatings estimates

Pension returns have also fallen in January, with the median balanced pension option down an estimated 2.3%, compared to a fall of 3.2% for the median growth option and 1.1% for the capital stable option.

Pension returns to January 2022

  YTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index -2.3% 11.3% 9.6% 8.7% 7.9% 9.7%
SRP50 Capital Stable (20-40) Index -1.1% 4.9% 5.0% 4.9% 4.7% 5.8%
SRP50 Growth (77-90) Index -3.2% 13.1% 10.8% 10.0% 9.1% 11.0%

Source: SuperRatings estimates

We saw the RBA maintain the cash rate at 0.1% and signal the end of quantitative easing but this does not mean a rate rise is imminent.

Mr Rappell said “While we have seen super fund performance take a hit this month, it is important that people remember that super is a long-term investment. Trying to time the market can see members end up in a worse position, so it’s best to talk to your fund or an adviser before making any changes.

Looking ahead, it’s likely that we will need to embrace the increased volatility that may come from an increase in rates. This is a big shift given we have become so used to the trend of falling rates over an extended period. We have had a strong decade of super returns and we have been through a variety of market environments since 1992.”

Mr Rappell continued “A couple of things to consider, super funds delivered a return of 13.4% in 2021 and over the long-term super returns have exceeded the typical objective of CPI+3%. It’s about checking you are in the right long-term option and sticking to it. If you had switched to cash at the start of last year you would have seen a return of 0.1% instead of 13.4% for a balanced option”.

Remember, your super fund is focused on helping you to navigate these changing markets. Thinking long-term when it comes to strategy and blocking out shorter-term noise remains the pragmatic approach and is aligned with funds’ approaches.

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

Require further information? Simply visit www.superratings.com.au

Super fund performance continued to recover over the second half of 2021, with results for the 2021 calendar year indicating member accounts are likely to receive a windfall of over $400 billion.

2021 was another big year for super, with the median Balanced option seeing a return of 13.4% return for calendar year 2021 and positive returns in 11 out of 12 months.

Since the 2000 calendar year, we have only seen 3 negative calendar year returns (2002: -4.8%, 2008: -19.7%, 2011: -1.9%), as shown below. The annualised return since 2000 sits at around 6.6% pa and is slightly ahead of fund objectives of inflation + 3% over rolling 10 year periods. Over the past 22 calendar years, this year’s estimated return would be the 6th highest and reflects the buoyant returns in markets.

This year’s return has again been driven by international shares and Australian shares, while property has also supported growth in balances.

The top 20 performing balanced options all returned 13.9% or more to their members over the year. According to data from leading research house SuperRatings, Hostplus – Balanced was the top performing fund over the 2021 calendar year, returning 19.1%. Followed by QANTAS Super Gateway – Growth and Sunsuper for Life – Balanced whose balanced options returned 18.5% and 16.5% respectively.

Top 20 balanced options over 12 months

 

Rank Option Name 1 Year % 10 Year %
1 Hostplus – Balanced 19.1 10.7
2 QANTAS Super Gateway – Growth 18.5 9.0
3 Sunsuper for Life – Balanced 16.5 10.2
4 Christian Super – MyEthicalSuper 16.0 9.0
5 TelstraSuper Corp Plus – Balanced 15.9 9.7
6 BT Super for Life – Pendal Sustainable Balanced 15.7 8.7
7 Suncorp Brighter Super Bus – Suncorp Multi-Manager Growth Fund 15.2
8 MLC MKey Business Super – Horizon 4 – Balanced Portfolio 15.1 9.3
9 AustralianSuper – Balanced 15.0 10.6
10 Plum – Pre-mixed Moderate 15.0 9.0
11 Vision SS – Balanced Growth 14.8 9.6
12 VicSuper FutureSaver – Growth (MySuper) Option 14.8 10.2
13 HESTA – Balanced Growth 14.5 9.7
14 Aware Super – Growth 14.2 9.9
15 legalsuper – Balanced 14.2 9.3
16 REI Super – Balanced 14.1 8.9
17 CFS-FC Wsale Pers – FirstChoice Wsale Multi-Index Balanced 14.0 9.0
18 Active Super – Balanced 13.9 9.1
19 CSC PSSap – MySuper Balanced 13.9 9.1
20 smartMonday PRIME – Balanced Growth – Active 13.9 9.2
SR50 Balanced (60-76) Index 13.4 9.2

However, superannuation is a long-term investment, therefore while it is interesting to see which funds performed well over the year, this needs to be considered in relation to performance over longer time periods. That way members can see whether their fund is a consistent strong performer as this is what really counts.

Hostplus – Balanced was the top performer over the long-term, as well as on a 1-year basis, with an average annual return of 10.7% over the last decade. Followed closely by AustralianSuper – Balanced and UniSuper Accum (1) – Balanced which both returned 10.6%.

Top 20 balanced options over 10 years

 

Rank Option Name 1 Year % 10 Year % pa
1 Hostplus – Balanced 19.1 10.7
2 AustralianSuper – Balanced 15.0 10.6
3 UniSuper Accum (1) – Balanced 12.5 10.6
4 Cbus – Growth (Cbus MySuper) 13.0 10.3
5 VicSuper FutureSaver – Growth (MySuper) Option 14.8 10.2
6 Sunsuper for Life – Balanced 16.5 10.2
7 Aware Super – Growth 14.2 9.9
8 CareSuper – Balanced 12.6 9.8
9 IOOF Employer Super Core – IOOF MultiMix Balanced Growth Trust 13.6 9.7
10 HESTA – Balanced Growth 14.5 9.7
11 TelstraSuper Corp Plus – Balanced 15.9 9.7
12 Prime Super – MySuper 12.3 9.7
13 Equip MyFuture – Balanced Growth 12.0 9.7
14 Vision SS – Balanced Growth 14.8 9.6
15 Mercy Super – MySuper Balanced 13.3 9.6
16 BUSSQ Premium Choice – Balanced Growth 12.5 9.4
17 Rest – Core Strategy 13.4 9.3
18 legalsuper – Balanced 14.2 9.3
19 Media Super – Balanced 12.9 9.3
20 MLC MKey Business Super – Horizon 4 – Balanced Portfolio 15.1 9.3
SR50 Balanced (60-76) Index 13.4 9.2

The Bumpiness Factor

With investment markets continuing to exhibit volatile performance compounded by the uncertainty faced around the globe as COVID-19 and its variants persist, it is important to consider the level of bumpiness i.e. the amount of ups and downs in your super account balance that you are comfortable with.

This also depends on what stage of the super journey you are in. For example, if you are younger, you have more time for your balance to recover if there is a dip in performance due to investment markets. Whereas, if you are approaching your retirement, you may not want to risk seeing a sharp dip in your account when you are about to switch to a pension or withdrawing your account balance upon retirement.

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 sits at the top of the table below, which shows that the fund achieved a return of 7.6% p.a. over the past seven years. While this return is below some of its peers, it has achieved this return with less ups and downs along the way.

Rank Option Name 7 Year %
1 QSuper – Balanced 7.6
2 BUSSQ Premium Choice – Balanced Growth 8.4
3 Prime Super – MySuper 8.6
4 Cbus – Growth (Cbus MySuper) 9.1
5 CareSuper – Balanced 8.5
6 Statewide Super – Active Balanced 8.2
7 Mercy Super – MySuper Balanced 8.6
8 Spirit Super – Balanced (MySuper) 8.6
9 VicSuper FutureSaver – Growth (MySuper) Option 8.7
10 Aware Super – Growth 8.7
11 Sunsuper for Life – Balanced 9.2
12 Hostplus – Balanced 9.7
13 AustralianSuper – Balanced 9.6
14 Media Super – Balanced 8.4
15 Catholic Super – Balanced Growth (MySuper) 8.1
16 IOOF Employer Super Core – IOOF MultiMix Balanced Growth Trust 8.3
17 Vision SS – Balanced Growth 8.9
18 HESTA – Balanced Growth 8.6
19 NGS Super – Diversified (MySuper) 8.1
20 CSC PSSap – MySuper Balanced 7.6
SR50 Balanced (60-76) Index 8.0

Spotlight on Sustainable Options

There continues to be a brighter spotlight being shone on the types of investments that funds are making, with members desiring greater consideration of environmental, social and governance (ESG) factors. The table below shows the top 10 sustainable balanced options ranked according to their 5 year return.

HESTA’s Sustainable Growth option provided the highest return to members over 5 years for a dedicated sustainable option, with a return of 11.7%. Followed by UniSuper Accum (1) – Sustainable Balanced and Super SA Triple S – Socially Responsible which delivered returns of 10.7% and 9.7% respectively.

 

Rank Option Name 5 Year %
1 HESTA – Sustainable Growth 11.7
2 UniSuper Accum (1) – Sustainable Balanced 10.7
3 Super SA Triple S – Socially Responsible 9.7
4 Aust Ethical Pers – Balanced 9.4
5 VicSuper FutureSaver – Socially Conscious Option 9.3
6 CareSuper – Sustainable Balanced 9.1
7 Aust Catholic Super & Ret – Socially Responsible 9.1
8 AustralianSuper – Socially Aware 9.0
9 Sunsuper for Life – Socially Conscious Balanced 9.0
10 Mercer Super Trust – Mercer Sustainable Plus Growth 8.9
Sustainable Balanced Option Median 8.6

Kirby Rappell, Executive Director of SuperRatings commented, “In the past we typically found that the performance of sustainable options tended to sit materially below standard balanced options. However, in recent years we have seen a shift, with sustainable balanced options performing competitively relative to standard balanced options.”

2021 was certainly an eventful year for Australia’s superannuation members, with a number of changes taking place, as well as a lot more ups and downs across investment markets.

We are seeing funds merging however there continues to be a large number of products across the market – in our latest review we rated over 530 superannuation products. Our product ratings are accessible on our website here.

Mr Rappell said, “With stapling changes taking effect late last year, your fund will now follow you when you change employers, so it’s time to make sure you are in a good one. As you settle into 2022, now is a good time to do a health check on your fund and be sure to look at returns as well as fees and insurance. While all super funds have good years and those that are more challenging, strong long term performance remains the main game for members.”

Mr Rappell continued, “Overall, it has been a big year for super. If we look at the long term, funds continue to perform well against objectives, but it is a likely to be a rockier year ahead. For consumers, it remains important to set your strategy, stick to it for the long term and future you will likely thank you.”

 

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

Require further information? Simply visit www.superratings.com.au

 

Analysis by SuperRatings has shown that paying attention to how your superannuation is invested pays dividends. SuperRatings has tracked the returns of the most common super options over the past 10 years with the results displayed in the chart below.

SuperRatings Executive Director, Kirby Rappell, says “A balance of $100,000 in Nov 2011 invested in a typical balanced option would now be worth $248,413, an increase of 148%. Compare that to a member invested in a cash option, whose balance would now be $123,178 – an increase of 23% and a shortfall relative to the balanced option outcome of over $125,000 – which emphasises the challenges for members with significant exposure to cash. While the balances of younger members grow strongly, those members trying to derive an income from their savings face some very real difficulties.”

SuperRatings sees the majority of pension assets sitting in Balanced, Conservative Balanced and Capital Stable options, with the latter two investing more in bonds and cash like investments. The median conservative balanced option grew to $210,292, while growth was more muted for capital stable members and those invested mainly in bonds through the typical diversified fixed interest option. There was a dip in balances due to the pandemic, with older members in more conservative options less impacted than growth focused accumulation members.

Looking at cash options more closely, over the last 10 years, a member sitting in cash would have seen a return of only 2.2% per annum. Mr Rappell continues “The experience of many Australians with exposure to cash has been extremely challenging. Reviewing your risk profile remains important, as retirees need to ensure they are invested in a way that helps them achieve their long-term objectives. We also need to see greater innovation in this space to ensure that super funds are able to help retirees achieve appropriate outcomes in retirement.”

SuperRatings recommends members consult their fund or an adviser they trust to help ensure any decision on how their super is invested is part of a long-term strategy.

November returns

November was another positive month for superannuation, as confidence remained high with vaccination rates hitting 90% and the economy opening up further. According to SuperRatings’ data, the median balanced, growth and capital stable options all rose an estimated 0.3% in November, with the balanced option returning an estimated 11.4% for the calendar year to date and the growth option returning an estimated 14.1% over the same period. However, returns for the past 6 months have been more muted, albeit positive, with greater volatility observed.

Accumulation returns to November 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 2.7% 12.7% 9.4% 8.5% 7.9% 9.0%
SR50 Capital Stable (20-40) Index 1.2% 5.3% 5.0% 4.7% 4.7% 5.5%
SR50 Growth (77-90) Index 3.3% 15.4% 11.1% 9.9% 8.9% 10.3%

Source: SuperRatings estimates

Pension returns were also positive in November. The median balanced pension option returned an estimated 0.3% over the month and 12.0% over the calendar year to date. The median pension growth option also returned an estimated 0.3% and the median capital stable option gained an estimated 0.4% through the month. Further, our latest estimates of the performance for the calendar year to date are 15.1% and 12.0% for the typical growth and capital stable options respectively.

Pension returns to November 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 2.7% 13.3% 10.3% 9.3% 8.4% 9.9%
SRP50 Capital Stable (20-40) Index 1.3% 5.7% 5.6% 5.3% 5.0% 6.0%
SRP50 Growth (77-90) Index 3.4% 16.5% 11.9% 10.8% 9.8% 11.4%

Source: SuperRatings estimates

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

Require further information? Simply visit www.superratings.com.au

SuperRatings is excited to announce its top-rated KiwiSaver schemes for 2022. The market continues to be extremely competitive, with fees and performance being key drivers of changes in ratings outcomes over the year. Eight providers were awarded a ‘Platinum’ rating for 2022.

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 industry eagerly awaited the results of the Financial Market Authority’s default tender review over the past year and Dec 1 marked the transition to the providers selected for 2021 to 2028. We are supportive of the movement from a default conservative fund to a balanced fund, with members benefiting from greater exposure to growth assets such as Australasian and Global Shares, which generate higher returns for members over the long run.

The focus on fees remains strong in both the Australian and New Zealand markets, we have seen fees decrease among KiwiSaver schemes, with fee reductions for percentage-based annual management fees and decreases or abolishment of member fees common themes.

We continue to believe in the importance of examining performance and fees together and do so through our Net Benefit research. This modelling allows us to examine the dollar outcome a member receives in their account taking into consideration their Scheme’s investment performance and the impact of fees. An interesting trend we have observed in Australia is the strong net benefit outcomes of some ESG and sustainable investments, an area previously considered to come at a higher cost with lower returns.

Further, the conversation about ESG and sustainability has become louder, with several superannuation funds in Australia, as well as New Zealand Schemes making commitments to achieve net zero emissions by 2050. It has been pleasing to see the progress made here through Mindful Money’s Aotearoa New Zealand Investor Coalition for Net Zero.

We acknowledge that members have faced a bumpy ride over the last few years coupled with uncertainty due to ongoing lockdowns. It has been really pleasing to see the support provided by schemes over this period to provide reassurance to members and education regarding the KiwiSaver environment. As businesses across the country had to adapt to lockdowns and working from home, we also saw KiwiSaver schemes adapting to the new world.

Kirby Rappell, Executive Director of SuperRatings commented, “Member seminars are now offered online by 80% of schemes that engaged with us through our 2021 review and through our discussions with providers this style of communication is going to remain a key channel for engagement with members. Content typically includes KiwiSaver 101 sessions, how to select a suitable fund, information on member contributions, the impacts of fund choice and contributions on your potential retirement balance, investment updates and information for first home buyers.”

Kirby Rappell continued, “A silver lining of the pandemic has been the leaps and bounds made in terms of connecting with people through online platforms such as video calling and webinars. There is a wealth of information now being provided to help members with their KiwiSaver, as well as general financial help such as budgeting and lifestyle planning. Short and engaging videos really resonate with people by providing complex information in bite sized, easy to understand segments.”

We have also seen the use of digital channels gaining traction, with the majority of schemes offering mobile apps and over a third providing live chat, with a focus on ensuring the best experience for members when using these channels through ongoing enhancements.

We look forward to seeing how the KiwiSaver market progresses as the transition to the new default providers occurs and new entrants and existing providers evolve.

SuperRatings’ Scheme Rating Criteria

Platinum Rated Schemes 

ASB KiwiSaver Scheme
BNZ KiwiSaver Scheme
Fisher Funds KiwiSaver Scheme
Fisher Funds TWO KiwiSaver Scheme
Kiwi Wealth KiwiSaver Scheme
Mercer KiwiSaver Scheme
Milford KiwiSaver Plan
Westpac KiwiSaver Scheme

Lonsec Gold Rated Schemes

AMP KiwiSaver Scheme
ANZ Default KiwiSaver Scheme
ANZ KiwiSaver Scheme
Aon KiwiSaver Scheme
Booster KiwiSaver Scheme
Generate KiwiSaver Scheme
New Zealand Defence Force KiwiSaver Scheme
OneAnswer KiwiSaver Scheme
Simplicity KiwiSaver Scheme

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

Require further information? Simply visit www.superratings.com.au

October was another positive month for superannuation, as confidence was high, in anticipation of lockdowns lifting and the economy opening up further. According to SuperRatings’ data, the median balanced option rose an estimated 0.7% in October, with the median growth option rising by a similar amount. While the median capital stable option was flat returning 0.0% in the month.
The 2021 calendar year to date has shown robust growth, with the median balanced option up 11.2%. This result remains well in excess of funds’ objectives and suggests funds are likely to record another year of healthy returns for members. SuperRatings Executive Director, Kirby Rappell, says “2021 has been a strong year for superannuation, with returns nearly three and a half times those of calendar year 2020 and almost double the yearly average for the past 20 years.”

Accumulation returns to October 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 2.5% 18.0% 9.1% 8.7% 8.0% 8.8%
SR50 Capital Stable (20-40) Index 0.9% 7.1% 4.8% 4.6% 4.6% 5.4%
SR50 Growth (77-90) Index 2.9% 22.2% 10.6% 10.2% 9.0% 10.0%

Source: SuperRatings estimates

Pension returns were also positive in October. The median balanced pension option returned an estimated 0.7% over the month and 11.7% over the calendar year to date. The median pension growth option returned an estimated 0.8% and the median capital stable option gained an estimated 0.1% through the month.

Pension returns to October 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 2.5% 19.3% 9.9% 9.6% 8.6% 9.8%
SRP50 Capital Stable (20-40) Index 1.0% 7.8% 5.4% 5.3% 5.1% 5.9%
SRP50 Growth (77-90) Index 2.9% 24.1% 11.6% 11.1% 10.0% 11.2%

Source: SuperRatings estimates

November 1 also marked the beginning of the government’s new stapling legislation, intended to prevent multiple accounts being created for members when they move employers. The new stapled fund will be a member’s super fund for life, following them as they change employers, and will mean that employers will need to check with new employees if they have an existing superannuation account before creating a new super fund account for them.

Mr Rappell comments “While this legislation will cut down on members having multiple super accounts, it is really important that members check which fund they are stapled to, to see if its performance stacks up and fees are competitive, as this could have a significant impact on their final retirement account balance.”

SuperRatings also suggests making sure the insurance cover offered by your stapled fund is suitable for you, as one of the benefits of default super accounts created with each employer was that insurance may have been tailored to the workplace. “If you are unsure what insurance cover is suitable for you, many funds provide insurance needs calculators that can help and also offer advice services,” concludes Mr Rappell.

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

Require further information? Simply visit www.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.