Hostplus’ defensive positioning sees fund lag industry rivals

Hostplus’ MySuper Balanced Option has returned 7.60 per cent for the financial year ended June 2024.

According to the fund, challenging economic conditions were persistent over the past 12 months and the fund took a more defensive position to listed markets in its default option.

“Saving for retirement is a marathon, not a sprint, which is why we are focused on seeking to deliver sustained performance over those longer investment horizons,” said Hostplus CEO David Elia.

Noting the option has delivered 8.33 per cent over 10 years, he said its strong long-term performance is “pleasing.”

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“Our active management approach is designed to optimise our potential to outperform the market over the long-term, helping to maximise the retirement savings of our members,” Elia said.

This, he said, is evidenced by the “consistent outperformance” of the fund’s actively managed investment options against its passive indexed options over the long term.

Earlier this month, the $300 billion fund AustralianSuper had conceded a defensive portfolio position until December 2023 had seen the fund allocate a lower weight to listed equities, resulting in decreased exposure to the sharemarket rally. 

The fund subsequently announced a “solid” return of 8.46 per cent from its balanced option for the financial year 2024 after a second-half repositioning. 

Looking at the performance of Hostplus’ default option, the fund’s CIO Sam Sicilia said the more defensive portfolio positioning aimed to temper some of the impacts of market fluctuations.

“We never invest for just one year – we consider the prevailing market conditions and leverage the attributes of the fund, namely our younger demographic, to invest with the aim of maximising return potential over the long term,” Sicilia said.

Higher exposure to defensive assets helped mitigate the impact of inflationary and uncertain market conditions over the past 12 months, he said, while asset classes like private credit and infrastructure performed “reasonably well” in these conditions, “which helped to balance out other sectors where growth was flat or lower than expected.”

Hostplus said the financial year 2023–24 returns exceed its investment return target for the Balanced option of CPI plus 3 per cent per annum over 10 years and CPI plus 4 per cent per annum over 20 years.

Still, the return of the default option lags a number of industry counterparts, such as HESTA’s 9.1 per cent for its MySuper Balanced Growth default option, TelstraSuper’s 9.6 per cent for its MySuper Growth investment option, and Rest’s 8.67 per cent for its default MySuper Core Strategy.

It also falls short of SuperRatings’ estimated median balanced option, which stands at around 8.8 per cent for the year to June 2024.

Indexed options rally through

Hostplus observed a “particularly strong” performance from its passive indexed investments, with its Indexed Balanced option returning 12.18 per cent over the year.

This double-digit return was attributed to the exceptional performance of global and domestic equity markets, particularly high-performing technology stocks.

Its Shares Plus option, which offers more exposure to listed markets, also returned 9.46 per cent.

“Our Indexed Balanced option has once again delivered highly favourable returns for our members invested in that option,” Elia said.

“Other options with a similar growth-oriented asset mix, including our Shares Plus option, also performed very well in the 2024 financial year to deliver above target returns.”

According to Elia, a key benefit of the fund’s extensive investment menu is “that it enables our members to have more choice when it comes to how they manage and seek to grow their retirement savings.”

“The number of members choosing to invest in our indexed and growth options has increased year on year, demonstrating the strength of our offering,” he said.