CFS credits equity allocations as ‘core drivers’ of FY23–24 returns

Colonial First State has reported its second consecutive year of double-digit returns for members of its MySuper balanced and growth funds.

The FirstChoice Employer Super balanced fund (MySuper Lifestage 1965–69) delivered a 12.1 per cent return for the financial year 2023–24, while the FirstChoice Employer Super growth fund (MySuper Lifestage 1975–79) delivered a 14.3 per cent return.

Jonathan Armitage, Colonial First State’s chief investment officer, said the strong investment performance has largely been driven by strong returns in global and domestic equities. Year to date, the S&P 500 is up almost 16.75 per cent and is up almost 25 per cent since June 2023. 

“The strength of global sharemarkets has really been the core driver of investment returns over the last 12 months,” Armitage said.

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Moreover, CFS, which holds nearly $150 billion in funds under administration, is in the “relatively unique” position of holding no legacy unlisted assets, he said.

“In an environment of higher interest rates, this has allowed us to deliver another year of solid returns for members,” Armitage said.

Looking into the new financial year, the investment executive said CFS continues to believe inflation data will be volatile, keeping interest rates higher for longer.

He also said this could create continued headwinds for some sectors like commercial real estate.

“Managing the evolving macro-economic environment will also be paramount over the coming year,” Armitage said.

Earlier this week, fellow retail fund AMP also credited a tactical overweight allocation to US equities towards its strong returns, returning 11.14 per cent for members of its AMP MySuper 1970s superannuation fund option, its largest by funds under management.

AMP MySuper 1980s and 1990s members, too, benefited from a high growth allocation, notching returns of 11.31 per cent for the financial year.