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

With half the country in what seems never ending rounds of lockdowns and pandemic fatigue setting in, one of the last things most Australians want to do is look at their Superannuation balances and investment options. That is, however, exactly what SuperRatings is wanting us to do, as neglecting your super or responding to short term market moves can have a detrimental effect on your super balance.

SuperRatings Executive Director Kirby Rappell says, ‘We looked at the impact of switching out of a balanced or growth option and into cash at the start of the pandemic and found that those with a balance of $100,000 in January 2020 and who switched to cash at the end of March would now be around $22-27,000 worse off than if they had not switched.’

This effect of switching into cash as a response to market turmoil is also seen when looking at returns over the past 15 years. In this period, a typical balanced Super option has risen substantially, with a balance of $100,000 in July 2006 accumulating to $247,557, more than doubling in size. Those members investing in a growth option have experienced an even stronger result, with a similar starting balance growing to $254,006. Share focused options have delivered the highest returns, with the median Australian shares option growing to $276,099 and the median international shares option growing to $271,051, though these types of options involve greater risks. Over the same period, a $100,000 balance invested in cash would only be worth $151,158 today.

When considering your Super options, you don’t need to go it alone as many Super funds provide advice and tools to their members. Says Mr Rappell, ‘Most funds will offer scaled advice for free or at a low cost, with members able to get advice on topics such as contributions, investment options, insurance in the fund and the transition to retirement.’ Scaled advice is general in nature so you will need to check if your situation and goals align with the advice.
Continues Mr Rappell, ‘For members who want more tailored advice, some funds will offer comprehensive advice that will also take into account your financial assets outside of superannuation.’ While there will be a cost associated with this comprehensive advice, most funds will allow the cost of the advice to be deducted from the superannuation account, just make sure you check any costs and how they can be paid before agreeing to get the advice.
Looking at more recent returns, balances continued to grow in July. The typical balanced option returned an estimated 1.3% over the month and 18.5% over the year. The typical growth option returned an estimated 1.3% for the month and the median capital stable option also increased 0.9% in the month.

Accumulation returns to July 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 1.3% 18.5% 7.9% 8.4% 8.0% 8.6%
SR50 Capital Stable (20-40) Index 0.9% 7.8% 4.5% 4.5% 4.8% 5.3%
SR50 Growth (77-90) Index 1.3% 22.7% 9.2% 9.5% 8.9% 9.6%

Source: SuperRatings estimates

Pension returns were also positive in July. The median balanced pension option returned an estimated 1.3% over the month and 20.0% over the year. The median pension growth option returned an estimated 1.5% and the median capital stable option also rose an estimated 0.9% in the month.

Pension returns to July 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 1.3% 20.0% 8.4% 9.1% 8.5% 9.5%
SRP50 Capital Stable (20-40) Index 0.9% 8.6% 5.2% 5.2% 5.2% 5.9%
SRP50 Growth (77-90) Index 1.5% 24.4% 9.7% 10.3% 9.8% 10.6%

Source: SuperRatings estimates

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.

Lonsec has welcomed key senior appointments with Mike Wright joining as CEO and Kevin Brennan as Chief Information Officer (CIO). These appointments follow the recent renewal of the Lonsec board.

Mike has over 25 years’ experience in leading businesses and teams within Financial Services and joined from Xplore Wealth Ltd (ASX: XPL.AX), where he was CEO and successfully led the friendly takeover to Hub24 (ASX: HUB.AX), a leading independent investment platform.

Mike has set himself an ambitious challenge for his first 100 days with the business, meeting with all 100+ employees, key partners and clients and says, ‘At a time when the financial services industry is going through so much change, it is incredibly exciting and reassuring to join a company like Lonsec that is so committed to supporting Advisers and Funds through industry changes.’

Mike joins at a dynamic time for Lonsec, with the Lonsec Managed Accounts hitting $2bn funds under management in July 2021 (up from $1bn FUM in October 2020), as well as being fittingly placed to support Advisers and their clients focus on sustainable and ethical investment strategies.

Lonsec has been at the forefront of supporting increased investor appetite for sustainable and ethical investments that also provide a solid return. In response, they developed the Lonsec Sustainable Managed Accounts to provide greater choice for clients seeking investment strategies that align with their personal values and demonstrate strong environmental, social and governance (ESG) practices.
Unique in the market, Lonsec Sustainable Managed Accounts combines both ESG, which focus on the underlying manager’s process to ESG factors and Sustainability measures, which focuses on the funds positive impact on the world.

The Lonsec Sustainable Managed Accounts have just been added to the Macquarie Wrap Platform and are also available on Hub24 and Netwealth.

Lonsec is also fulfilling its thought leadership mandate by launching a Sustainability program to continue to educate investors. Lonsec’s Head of Sustainability, Tony Adams says ‘With the Lonsec Sustainability program, we want to help financial advisers and their clients take a sustainable approach to investing by sharing insights and research powered by Lonsec and a range of industry leaders.’ Via webinars and articles, the Lonsec Sustainability program has recently covered subjects such as ‘greenwashing’ and how Advisers can start sustainable investing conversations with their clients. This is a partner program to the long running Lonsec Retire program, now in its ninth year.

Kevin Brennan is excited to be joining Lonsec as Chief Information Officer. Kevin brings more than 20 years’ experience running large technology teams in the wealth industry. His key focus will be to elevate the role of technology within Lonsec and drive a comprehensive technology and data strategy to transform its service architecture and further accelerate business growth.

Mike concludes, ‘We are so fortunate to be in a strong position to continue to honourably help Advisers, Managers and investors with insights and solutions to help them navigate the immense challenges that many of them face and share in common.’

RELEASE ENDS

For more information, contact:

Rob Hardy
Robert.Hardy@lonsec.com.au
1300 826 395

The 2021 financial year saw a rapid recovery from the economic downturn, followed by ongoing growth as confidence soared on the back of the development of COVID-19 vaccines. This led to the hope of a return to a more normal lifestyle, with superannuation funds riding the market highs to deliver some of the best returns members have seen since superannuation was introduced.

With super funds finalising their reporting for June 2021, the strength of the market rebound is clear. The top 20 performing balanced options all returned over 18% to their members over the year, a result that nobody would have predicted 12 months ago.

According to data from leading research house SuperRatings, QANTAS Super Gateway – Growth was the top performing fund over the 2021 financial year, returning 22.0%. This was followed by BT Panorama Full Menu – BT Wholesale Multi-manager and Hostplus whose balanced options returned 21.4% and 21.3% respectively.

Top 20 balanced options over 12 months


Source: SuperRatings 

While extraordinary performance over the last 12 months is to be acknowledged, long-term returns are what really count. Here is where members can see which funds have consistently delivered quality returns.

The top performers over ten years were AustralianSuper, whose balanced option has returned 9.73% p.a. over the last decade, followed closely by Hostplus – Balanced and Cbus – Growth (Cbus MySuper) returning 9.67% and 9.6% respectively.

Top 20 balanced options over 10 years


Source: SuperRatings 

COVID-19 introduces market downturns to the next generation of investors

Before the impact of the COVID-19 pandemic, the globe had seen the longest run of growth in its history. As a result, the market crash in February 2020 would have been the first time younger investors experienced such a significant and sharp fall in their wealth. Increasingly, investors are acknowledging the importance of not only the return that an option delivers but also the level of risk it takes on to achieve that return.

One way to examine this is looking at the ups and downs in returns over time. Growth assets like shares may return more on average than traditionally defensive assets like fixed income, but this comes with a bumpier ride.

The table below shows the top 20 funds ranked according to their volatility-adjusted return, which measures how much members are being rewarded for taking on the ups and downs.

QSuper’s balanced option return of 8.1% p.a. over the past seven years is below some of its peers, but it has achieved this with a smoother ride along the way, meaning it has delivered the best return given the level of volatility involved.

Top 20 balanced options over 7 years ranked by risk and return

Option Name Risk Ranking 7 Yr Return (p.a.)
QSuper – Balanced 1 8.1%
BUSSQ Premium Choice – Balanced Growth 2 8.5%
Prime Super – MySuper 3 8.7%
CareSuper – Balanced 4 8.7%
Cbus – Growth (Cbus MySuper) 5 9.2%
Spirit Super – Balanced (MySuper) 6 8.7%
Catholic Super – Balanced Growth (MySuper) 7 8.4%
Aware Super – Growth 8 8.6%
VicSuper FutureSaver – Growth (MySuper) Option 9 8.6%
AustralianSuper – Balanced 10 9.6%
Mercy Super – MySuper Balanced 11 8.3%
CSC PSSap – MySuper Balanced 12 8.0%
Media Super – Balanced 13 8.3%
Sunsuper for Life – Balanced 14 8.9%
Hostplus – Balanced 15 9.5%
NGS Super – Diversified (MySuper) 16 8.1%
Vision SS – Balanced Growth 17 8.8%
HESTA – Balanced Growth 18 8.5%
Active Super – Balanced Growth 19 8.0%
Equip MyFuture – Balanced Growth 20 8.5%

Source: SuperRatings

Sustainable options keep pace with the market recovery

Sustainable investments are becoming increasingly appealing to a broad range of investors, as the impacts of businesses on people and places becomes more widely accepted.

While a relatively recent addition to many funds’ portfolios, long-term returns remain crucial when looking at sustainable options. The table below shows the top 10 sustainable balanced options ranked according to their 5 year return.

SuperRatings data shows that HESTA’s Sustainable Growth option provided the highest return to members over 5 years for a dedicated sustainable option, with a return of 11.8%. This was 1.2% more than the highest balanced option return over the same period. This was followed by the UniSuper Accum (1) – Sustainable Balanced and VicSuper FutureSaver – Socially Conscious options which returned 10.2% and 9.8% respectively.

Top 10 sustainable balanced options over 5 years


Source: SuperRatings

“Overall, returns for the 12 months to June 2021 should provide everyday Australians with confidence that super funds have capitalised on the market recovery, while also performing well during the sell-off in March 2020”, said SuperRatings Executive Director Kirby Rappell.

Mr Rappell continued “while we saw funds that had a high exposure to equity markets fall dramatically when the pandemic first hit markets in February, these were the same funds that then rebounded strongly as markets recovered.

In saying that, it has been the year of domestic and global shares and listed property as key drivers of performance.”

The funds that have performed well on a 10 year basis followed a range of approaches. We have seen funds pursuing alternatives continue to perform well, although we expect to see a greater emphasis on asset allocation in coming years as funds look to drive down costs over the long term.

Mr Rappell commented, “a really interesting trend has been the evolution of funds’ sustainable options. In the past, the average sustainable option’s return tended to lag the standard balanced option. However, in more recent times, these options have performed well with the top performing options surpassing their typical balanced style counterparts in some cases.”

The key message here for funds and members is to take the time to think about your long-term strategy. The recent pandemic has reinforced the importance of setting up your super in the best way, to ensure you are on track for your retirement. Volatility will come and go, but having a long-term strategy is what will give you the comfort and confidence to ride it out.

Release ends

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.”

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.

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.

Release ends

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

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

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

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

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

Release ends

For more information, contact:

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

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.”

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
E: Kirby.Rappell@superratings.com.au

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