Super funds continue to face a challenging economic and investment environment, though we have seen a small recovery so far over the month of July. The median balanced option is estimated to have increased by 0.9% over the first 11 days of July.

Leading research house SuperRatings has released the top performing funds within its SR50 Balanced Index which tracks performance of 50 options with exposure to growth assets of between 60 to 76%. Hostplus – Balanced was the top performing option for the 1-year period ending 30 June 2022, returning 1.6%.

David Elia Chief Executive Officer for Hostplus indicated the fund’s performance was “…a testament to Hostplus’s active investment approach, especially in navigating volatile markets.”

QANTAS Super’s balanced option came in second achieving a return of 0.6%, following its first-place result for the financial year to 30 June 2021.
QANTAS Super’s Chief Investment Officer Andrew Spence commented, “Our focus on diversification, risk management and investment governance help to deliver competitive returns despite the uncertainty in markets, as evidenced by our returns in FY 21/22 and FY 20/21.”

Top 10 balanced options over 12 months

Rank Option Name 1 Year % 10 Year % pa
1 Hostplus – Balanced 1.6 9.7
2 QANTAS Super Gateway – Growth 0.6 8.1
3 Christian Super – MyEthicalSuper 0.5 7.9
4 legalsuper – MySuper Balanced -1.0 8.3
5 Australian Retirement Trust – Super Savings  – Balanced -1.0 9.0
6 Energy Super – Balanced -1.2 8.1
7 Aust Catholic Super & Ret – Balanced -1.2 7.8
8 CareSuper – Balanced -1.7 8.7
9 HESTA – Balanced Growth -1.8 8.5
10 TelstraSuper Corp Plus – Balanced -1.9 8.5
  SR50 Balanced (60-76) Index -3.1 8.1

The table above also displays 10-year performance for these funds that have performed the best over the 1-year period, as super is ultimately a long-term investment and while it is interesting to compare performance over shorter-term periods, it is not the full story. This is particularly important to emphasise given the unprecedented levels of volatility we have seen since the beginning of the pandemic.

Hostplus was also the top performer over the long-term, with an average annual return of 9.7% over the last decade. Followed closely by AustralianSuper – Balanced with a return of 9.3% and Australian Retirement Trust – Super Savings with a return of 9.00%. Cbus – Growth (MySuper) delivered a close fourth ranking return of 8.96%.

AustralianSuper Chief Investment Officer Mark Delaney stated, “After more than 10 years of economic growth our outlook suggests a possible shift from economic expansion to slowdown in the coming years. In response, we have started to readjust to a more defensive strategy, as conditions become less supportive of growth asset classes such as shares.”

Top 10 balanced options over 10 years

Rank Option Name 1 Year % 10 Year % pa
1 Hostplus – Balanced 1.6 9.7
2 AustralianSuper – Balanced -2.7 9.3
3 Australian Retirement Trust – Super Savings – Balanced -1.0 9.0
4 Cbus – Growth (MySuper) -3.8 9.0
5 UniSuper Accum (1) – Balanced -4.2 8.9
6 CareSuper – Balanced -1.7 8.7
7 VicSuper FutureSaver – Growth (MySuper) Option -3.3 8.7
8 HESTA – Balanced Growth -1.8 8.5
9 Hostplus – Indexed Balanced -5.7 8.5
10 Aware Super – Growth -3.7 8.5
  SR50 Balanced (60-76) Index -3.1 8.1

The Bumpiness Factor

SuperRatings has for many years also looked at how bumpy or consistent a fund’s returns are over time. We have continued to focus on this amid the ongoing ups and downs we are seeing across Australian and global investment markets.

Kirby Rappell Executive Director of SuperRatings commented, “Since the bottom of the GFC we haven’t seen huge amounts of volatility coming through, there have been a few moments, but we have seen extreme levels of volatility since COVID-19 hit and in terms of the menu for the year ahead, we expect to see more volatility.”

The table below shows the top 10 funds ranked according to their volatility-adjusted return, which measures how much members are being rewarded for taking on the ups and downs.

Australian Retirement Trust – QSuper Accum. – Balanced sits at the top of the table below, which shows that the fund achieved a return of 6.1% p.a. over the past seven years. Hostplus – Balanced follows closely in terms of the ranking based on the ability to navigate the ups and downs of the market. While CareSuper – Balanced rounds out the top 3 with a 7-year return of 6.8%.

Australian Retirement Trust’s Chief Investment Officer Ian Patrick commented, “Both Australian Retirement Trust portfolios incorporate dynamic asset allocation processes that see weights increased as expected forward returns increase. While the recent sell off in many markets clearly makes them cheaper, this is tempered by economic views, particularly given the uncertain outlook for inflation.”

Top 10 Funds Based on Risk-Adjusted Performance with 7 Year Return Shown

Rank Option Name Rolling 7 Year %
1 Australian Retirement Trust – QSuper Accum. – Balanced 6.1
2 Hostplus – Balanced 8.1
3 CareSuper – Balanced 6.8
4 Cbus – Growth (MySuper) 7.1
5 Mercy Super – MySuper Balanced 6.8
6 BUSSQ Premium Choice – Balanced Growth 6.3
7 Australian Retirement Trust – Super Savings  – Balanced 7.3
8 AustralianSuper – Balanced 7.6
9 Prime Super – MySuper 6.3
10 QANTAS Super Gateway – Growth 6.8
SR50 Balanced (60-76) Index 6.1

Kirby Rappell commented, “While the 2022 financial year has seen super funds record a modest fall, the benefits of diversification have shone through. When we compare returns for equity, bond and listed property markets to balanced style portfolios among super funds, these results should be reassuring to members.”

Mr Rappell continued, “Superannuation is a long-term investment and patience remains key. For those Australians under 50, the recent market volatility is not expected to have any impact on their retirement. This year’s results are just one out of a 30 to 40 year investment for younger Australians.”

This result is more concerning for those nearing or in retirement, however, we often see these members sitting in investment options which are less exposed to these market movements which can lessen the impact. The sobering result for this year is likely to be those members invested in diversified fixed interest, with rising bond yields resulting in capital losses for members in an area often considered defensive.

As 30 June returns are now being finalised, funds will be focused on preparing member statements. Making sure you are putting aside some time to engage with your super statement will be time well spent. Checking the type of investment option you are in, and whether it suits the level of ups and downs you’re comfortable with, is worthwhile, with most funds offering a risk profiling tool on their websites to help members understand their own attitudes to risk. As well as seeing the calculators your fund offers, about 60% of super funds now offer an app, so if you have never checked your super before, now might be the time to get started.

Super has a lot to celebrate over the past 30 years. Since 1992, an estimated 7% per annum return means that $1 invested in 1992 is now estimated to be worth $7.67, depending on fees. While we will see ups and downs over time, super has performed strongly over the long term with 25 positive returns over the past 30 years.

How can you access help?

We rated over 530 superannuation products. Our product ratings are accessible on our website here: https://www.superratings.com.au/products/

You can access advice services on many different types of topics including investments, insurance and retirement, with more detailed advice also available that considers your personal situation – 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 advice services are available but note there may be a cost for doing so, check how much advice will cost and how you can pay for it before going ahead to ensure it’s right for you.

Alternatively, you may wish to discuss your super with a financial adviser you trust to understand whether your current super settings are appropriate for your personal situation.

The Government provides information on how to select a financial adviser through the MoneySmart website:

https://www.moneysmart.gov.au/investing/financial-advice/choosing-a-financial-adviser

 

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

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

 

The superannuation industry reached a major milestone on the first of July, with the superannuation guarantee system being in place for 30 years. However, it comes at a time of significant market turbulence, with fund performance dipping into the red this financial year. This is off the back of the growing challenges of inflation and interest rate hikes, as well as ongoing global supply chain difficulties due to COVID-19 and the war in Ukraine. Despite the market volatility we have observed over the period, $1 of super invested on 1 July 1992 in the median balanced option, with 60-76% growth assets, is estimated to be worth $7.67 today (depending on fees), underlining the significant benefits super has brought to Australians over the past 30 years.

Leading superannuation research house SuperRatings estimates a return of -3.3% for the median balanced option for the financial year ending June 2022. This is the fifth time financial year returns have been negative since the inception of superannuation in 1992.

Executive Director of SuperRatings, Kirby Rappell said, “Funds have had a challenging second half of the financial year, dragging on a solid first half. This was the 5th negative return for balanced options we have seen since the introduction of super 30 years ago; however, it follows the second highest annual return of 17.8% in 2021. So, when you look at it over the last two years, members’ balances are up.”

Mr Rappell continued “Superannuation is a long-term investment and funds continue to provide strong long-term returns on average and have outperformed the typical CPI+3.0% investment objective. When you consider that share markets are down around 10-12% across Australia and globally, super funds have done well to prevent some of the steep falls that we have seen from being passed through to members’ super account balances.”

The median balanced option declined by an estimated -3.4% over June, while the median growth option reduced by an estimated -4.4%. While capital stable options which hold more traditionally defensive assets such as cash and bonds only fell by an estimated -1.7%.

Accumulation returns to June 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 -3.4% -3.3% 4.2% 5.6% 6.0% 7.9%
SR50 Capital Stable (20-40) Index -1.7% -2.7% 1.9% 3.1% 3.5% 4.7%
SR50 Growth (77-90) Index -4.4% -4.3% 5.1% 6.8% 7.0% 9.1%

Source: SuperRatings estimates

Pension returns also declined in June, with the median balanced pension option down an estimated -3.9%. The median growth option fell by -4.8% while the median capital stable option saw an estimated -2.0% return.

Pension returns to June 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 -3.9% -4.0% 4.6% 6.3% 6.6% 8.8%
SRP50 Capital Stable (20-40) Index -2.0% -3.2% 2.0% 3.4% 4.0% 5.1%
SRP50 Growth (77-90) Index -4.8% -4.9% 5.4% 7.3% 7.6% 10.2%

Source: SuperRatings estimates

30 Years of Super Fund Performance

The chart below shows that the average annual return since the inception of the superannuation system is 7.0%, with the typical balanced fund exceeding its long-term return objective of CPI+3.0%. If we consider this in dollar terms $1 invested in the median super fund’s balanced option would now be worth approximately $7.67 depending on the impact of fees.

Perils of Timing the Market

We continue to emphasise the importance of setting a long-term strategy for your superannuation. We suggest members remain alert and review their superannuation settings such as whether they are in the most appropriate investment option for their situation and checking their fees. We encourage people not to panic and speak with their fund or an adviser they trust before making any changes to their superannuation settings.

We found that a member who had a $100,000 balance and switched to cash from a growth or balanced option at the onset of the pandemic in March 2020 would be $35,000 to $45,000 worse off as at the end of June 2022. We continue to emphasise that while markets do dip at points over time, they are expected to recover over the longer term.

The chart below shows that over the last 15 years a member in the typical balanced option would have seen a balance of $100,000 in June 2007 grow to $206,769. A member in a growth option saw their balance accumulate to $205,647.
International Shares options have performed the strongest with the median option rising to $209,107, though it has been a bumpy ride across global markets in the last few years. While the median Australian Shares option sat slightly below its global counterpart at $207,525.

Mr Rappell commented, “Members should prepare for continued volatility with a rocky road ahead for investment markets. If you are not approaching or in retirement, keep in mind that all market movements in the short term are not the real story as you can’t access your money now. You only realise that loss if you switch investment options or take your money out, which would take away the opportunity to participate in any future recovery.”

“Whereas the current situation is more concerning for those nearing or in retirement. Typically, we see these members sitting in investment options which are less exposed to these market movements which lessens the impact of the bumps. The silver lining of the recent interest rate rises is it will help those deriving an income from fixed income assets, following the anaemic cash rate levels we have seen in recent years.”

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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

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.”

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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

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.

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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

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

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.