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

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

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

Accumulation returns to 30 April 2024

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

Source: SuperRatings estimates

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

Pension returns to 30 April 2024

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

Source: SuperRatings estimates

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

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

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

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

Accumulation returns to 31 March 2024

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

Source: SuperRatings estimates

 

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

Pension returns to 31 March 2024

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

Source: SuperRatings estimates

Reflecting on Superannuation balances rebound since COVID

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

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

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

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

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

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

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

Accumulation returns to February 2024

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

Source: SuperRatings estimates

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

Pension returns to February 2024

 

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

Source: SuperRatings estimates

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

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

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

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

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

Accumulation returns to January 2024

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

Source: SuperRatings estimates

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

Pension returns to January 2024

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

Source: SuperRatings estimates

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

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Kirby.Rappell@superratings.com.au

Despite returns swinging between positive and negative throughout the year, super funds delivered strong returns for members over 2023, boosted by a share rally in the final quarter of the calendar year. The median Balanced option reported a 2.7% return in December, and 9.6% for the full 2023 calendar year, fully recovering the
-4.8% loss from the previous year.

Accumulation returns to 31 December 2023

  Monthly 1 yr 3 yrs
(p.a.)
5 yrs
(p.a.)
7 yrs
(p.a.)
10 yrs
(p.a.)
SR50 Balanced (60-76) Index 2.7% 9.6% 5.9% 7.1% 6.7% 6.8%
SR50 Capital Stable (20-40) Index 2.0% 6.5% 2.8% 3.9% 3.9% 4.4%
SR50 Growth (77-90) Index 3.0% 11.0% 7.0% 8.6% 7.9% 7.9%

Source: SuperRatings estimates

The median growth option returned 3.0% in December and 11.0% over the year, while a smaller allocation to shares resulted in the median capital stable option returning 2.0% for the month and 6.5% across the year.

International shares have been the standout performer over the year, led by strong growth in technology shares. Returns were also strongly supported by Australian shares and further bolstered by rising cash rates improving fixed interest and cash returns.

*Balances are based on monthly SR Index returns and assume no additional contributions over the investment period. Returns are calculated net of investment fees and taxes but do not consider administration fees or other potential deductions from member’s accounts.

Funds have also delivered for members over the longer term. An investment of $100,000 in the median balanced option 10 years ago would now be worth $189,005 while investing in the median growth option would now be worth $201,539. Members who invested in cash would have $117,637.

The highest SuperRatings Balanced Index returns over the year was 13.2% for members in the Hostplus – Indexed Balanced option, closely followed by Brighter Super Optimiser Accumulation – Multi-Manager Growth Fund returning 13.1% while ESSSuper – Balanced Growth completes the top 3 returning 12.8%.

Top 20 balanced options over 12 months to 31 December 2023

Rank Option Name 1 Year % 10 Year % PA
1 Hostplus – Indexed Balanced 13.2 7.3
2 Brighter Super Optimiser Accumulation – Multi-Manager Growth Fund 13.1
3 ESSSuper – Balanced Growth 12.8
4 CFS-FC Wholesale Personal – CFS Enhanced Index Balanced 11.9 6.5
5 Vision Super – Balanced Growth 11.7 7.5
6 IOOF Employer Super Core – MLC MultiSeries 70 11.4 6.8
7 Aware Super Future Saver – Balanced 11.0 7.2
8 GESB Super – My GESB Super Plan 10.7 6.3
9 TWUSUPER – Balanced 10.6 6.7
10 HESTA – Balanced Growth 10.5 7.4
11 ANZ Smart Choice Super – Growth 10.4 6.0
12 UniSuper – Balanced 10.3 7.8
13 Prime Super – MySuper 10.3 7.1
14 Australian Retirement Trust – Super Savings – Balanced 10.2 7.9
15 NESS – NESS MySuper 10.2 6.6
16 Raiz Super – Moderately Aggressive 10.2
17 REI Super – Balanced 10.2 6.5
18 Equip Super MyFuture – Balanced Growth 10.2 7.2
19 Brighter Super Accumulation – Balanced 10.1 6.8
20 smartMonday PRIME – Balanced Growth – Active 10.1 6.3
SR50 Balanced (60-76) Index 9.6 6.8

*Performance tables are based on options included in the SR50 Balanced Index and do not represent all Balanced (60-76) options offered by superannuation funds. Returns are after investment fees and taxes and are rounded to one decimal place; however, rankings are determined using unrounded data held by SuperRatings.

Superannuation remains a long-term investment for most, with many members having several decades of returns before retirement. It is therefore important to remain focused on longer term returns, with the top performing funds over 10 years listed below.

The Hostplus – Balanced option remains the top performer over the long-term, with an average annual return of 8.3%, and is the only fund in our index with a higher than 8% annual return over 10 years.

Top 20 balanced options over 10 years to 31 December 2023

Rank Option Name 1 Year % 10 Year % pa
1 Hostplus – Balanced 8.5 8.3
2 AustralianSuper – Balanced 9.0 7.9
3 Australian Retirement Trust – Super Savings – Balanced 10.2 7.9
4 UniSuper – Balanced 10.3 7.8
5 Cbus – Growth (MySuper) 9.5 7.6
6 Vision Super – Balanced Growth 11.7 7.5
7 CareSuper – Balanced 9.0 7.5
8 HESTA – Balanced Growth 10.5 7.4
9 Spirit Super – Balanced (MySuper) 10.0 7.4
10 Hostplus – Indexed Balanced 13.2 7.3
11 Australian Food Super Employer – Balanced 9.5 7.3
12 Aware Super Future Saver – Balanced 11.0 7.2
13 First Super – Balanced 9.4 7.2
14 Equip Super MyFuture – Balanced Growth 10.2 7.2
15 Qantas Super – Growth 8.8 7.1
16 Prime Super – MySuper 10.3 7.1
17 IOOF Employer Super Core – MLC MultiActive Balanced 9.4 7.0
18 TelstraSuper Corporate Plus – Balanced 8.9 6.9
19 Australian Ethical Personal – Balanced 9.7 6.9
20 BUSSQ Premium Choice – Balanced Growth 8.8 6.9
SR50 Balanced (60-76) Index 9.6 6.8

*Performance tables are based on options included in the SR50 Balanced Index and do not represent all Balanced (60-76) options offered by superannuation funds. Returns are after investment fees and taxes and are rounded to one decimal place; however, rankings are determined using unrounded data held by SuperRatings.

With shares driving most of 2023’s returns, passive investment options, where a fund tracks a specified index, performed well over the year. The table below displays the top 10 passive fund returns over 2023 and over 5 years, with most of these options having been available within superannuation for a shorter length of time.

Top 10 balanced passive options over 12 months to 31 December 2023

Rank Option Name 1 Year % 10 Year % pa
1 Aware Super Future Saver – Balanced Indexed 14.3
2 Rest – Balanced Indexed 13.5 8.4
3 HESTA – Indexed Balanced Growth 13.3
4 Hostplus – Indexed Balanced 13.2 8.4
5 netwealth Super Accelerator Core Emp – Index Opportunities Growth Fund 13.1 6.7
6 Australian Retirement Trust – Super Savings – Balanced Index 12.9 7.9
7 ClearView WealthFoundations Super – IPS Index Base 70 12.9
8 Brighter Super Accum – Indexed Balanced 12.8
9 Cbus – Indexed Diversified 12.7
10 AustralianSuper – Indexed Diversified 12.5 8.1

*Performance tables are based on passive options with a growth asset allocation between 60%-76%. Returns are after investment fees and taxes and are rounded to one decimal place; however, rankings are determined using unrounded data held by SuperRatings.

As we have seen MySuper offerings develop in recent years, it is also worthwhile to note that lifecycle funds had a strong year. These funds reduce members exposure to growth assets, generally from around age 45-55, and therefore have a higher exposure to growth assets than Balanced options. With growth assets performing well, these options have done well for members in 2023.

We have taken a representative cohort below, showing the returns expected to have been realised for younger members (<45 years old) in these products.

Lifecycle performance over 12 months to 31 December 2023

RANK LIFECYCLE OPTION TYPE GROWTH ASSETS 1 YEAR % 5 YEAR % PA
1 GuideSuper & Child Care MySuper – Building Lifestage High Growth (91-100) 98 14.8 9.0
2 Vanguard MySuper – Lifecycle Age 47 and under Growth (77-90) 90 14.7
3 Virgin Money Super – LifeStage Tracker Born 1979 – 1983 Growth (77-90) 90 14.4 9.2
4 Essential Super MySuper – Lifestage 1980-84 High Growth (91-100) 93 13.8 7.9
5 CFS FC MySuper – Lifestage 1980-84 High Growth (91-100) 93 13.6 7.9
6 Mine Super MySuper – Lifecycle Investment Strategy Age 50 and Under High Growth (91-100) 98 13.6 9.3
7 Russell iQ Super MySuper – MySuper GoalTracker Age < 50 High Growth (91-100) 95 13.3

*Table above shows lifecycle funds tracked by SuperRatings. Representative cohort above is for members 40-45 years old. Returns for younger members in these solutions are generally comparable to those above.

The table above shows that we are seeing greater levels of competition across the market, which is a good thing for consumers. While we have seen mixed outcomes for lifecycle since 2014, it is pleasing to see the renewed competition coming to market for default members in these solutions. Generally, these funds have higher allocations to listed equities, which has supported their performance outcomes in 2023.

While we see inflation slowing into 2024, as the impact of the interest rate rises throughout 2023 softens consumer demand, we expect to see continued ups and downs, as markets remain sensitive to local and global events. The new year is a good time for members to consider the level of ups and downs they are willing to tolerate and do a health check on their fund across performance, fees and insurance.

2023 was another eventful year for Australia’s superannuation members, with funds navigating a range of market environments and shocks as well as ongoing and expanded scrutiny of how well their investments are performing.

We have seen a slowing of funds merging and investment menus consolidating with a significant number of funds now well into their journey towards realising merger benefits and, hopefully, being able to pass those back to members through better servicing and investment performance. In our latest review we rated over 400 superannuation products. Our product ratings are accessible on our website here.

SuperRatings Executive Director Kirby Rappell said, “Members are likely pleased with this year’s performance, with most seeing a full recovery from last year’s losses. Long term strategy and high levels of diversification continue to result in impressive long-term performance by those managing our retirement savings. As we look ahead to what 2024 might bring for super fund returns, ongoing uncertainty means it remains important to set a strategy and stick with it despite the potential for periods of falling balances.”

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

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

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

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

Accumulation returns to November 2023

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

Source: SuperRatings estimates

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

Pension returns to November 2023

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

Source: SuperRatings estimates

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

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

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

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Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

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

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

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

Accumulation returns to October 2023

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

Source: SuperRatings estimates

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

Pension returns to October 2023

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

Source: SuperRatings estimates

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

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

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

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

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

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

Accumulation returns to September 2023

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

Source: SuperRatings estimates

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

Pension returns to September 2023

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

Source: SuperRatings estimates

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

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

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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

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

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

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

Accumulation returns to August 2023

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

Source: SuperRatings estimates

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

Pension returns to August 2023

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

Source: SuperRatings estimates

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

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

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

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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

The median balanced option delivered a return of 1.5% in July according to estimates from leading superannuation research house SuperRatings, with funds continuing to build on the momentum in markets seen over the final quarter of FY23.

The impact of inflation continues to drive markets with most Australian and global equities delivering modest returns, while energy and commodities performed well over July. We expect returns will remain bumpy over the short term, despite the Reserve Bank of Australia taking a wait and see approach in both July and August following indications that the tightening cycle is beginning to have a clearer impact on spending and consumption.

The median growth option rose by an estimated 1.8%, while the median capital stable option delivered a small positive result, with an increase of 0.8%.

Accumulation returns to July 2023

 

Monthly

1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.)

10 yrs (p.a.)

SR50 Balanced (60-76) Index 1.5% 7.2% 7.8% 5.9% 6.7% 7.2%
SR50 Capital Stable (20-40) Index 0.8% 3.6% 3.2% 3.1% 3.7% 4.5%
SR50 Growth (77-90) Index 1.8% 9.2% 9.4% 7.0% 8.3% 8.5%

Source: SuperRatings estimates

Pension returns also increased in July, with the median balanced pension option up an estimated 1.7%. The median growth option is estimated to rise 2.0% for the month while the more defensive median capital stable pension option is estimated to deliver a 0.9% return.

Pension returns to July 2023

 

Monthly

1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.)

10 yrs (p.a.)

SRP50 Balanced (60-76) Index 1.7% 8.2% 8.5% 6.6% 7.6% 8.0%
SRP50 Capital Stable (20-40) Index 0.9% 3.8% 3.7% 3.5% 4.1% 5.0%
SRP50 Growth (77-90) Index 2.0% 10.1% 10.0% 7.6% 8.8% 9.2%

Source: SuperRatings estimates

Executive Director of SuperRatings, Kirby Rappell commented, “Funds have had a strong finish to FY23 with the median balanced fund returning 9.1% over the year to June and it is pleasing to see funds maintaining that momentum into the first month of FY24.”

With funds in the process of preparing annual statements, it is a great time to think about reviewing your superannuation arrangements. There are some simple rules of thumb to check including the level of fees you are paying, the performance of your investments and how much insurance cover you have.

If you are unsure of what settings are suitable for you, reach out to your fund to see what services they might offer to help you make these decisions or talk to a trusted adviser and remember to check if there is any cost associated with accessing these services before you agree to them.

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

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