POWERED BY MOMENTUM MEDIA
SuperRatings reveals balanced fund returns for FY22–23
The median balanced option returned 1.2 per cent last month, bringing annual superannuation fund returns to a competitive 8.5 per cent for the year to 30 June 2023, according to SuperRatings.
In comparison, last year delivered a -3.4 per cent return, which demonstrates the industry’s ability to navigate an uncertain market environment, the research house said.
Capital stable options, which hold more traditionally defensive assets like bonds and cash, returned 0.3 per cent in June while the median growth option returned 1.4 per cent over the month.
This year, the strong performance was supported by Australian equities and listed property, though international equities were the standout performers.
Unlisted assets, which provide portfolio diversification and have performed well over the long term, placed a drag on returns as funds wrote down unlisted valuations.
Cash options also delivered some respite with rising returns amid interest rate rises by central banks.
“While there are significant conversations about interest rate rises, inflation, and global uncertainty front and centre within the economy, it is reassuring to see superannuation funds’ ability to deliver a competitive outcome for everyday Australians,” said Kirby Rappell, executive director of SuperRatings.
“While economic pressures are hard to ignore, superannuation continues to perform well on a long-term basis with most funds managing to keep performance in line with the typical CPI+3.0 per cent investment objective over 10 and 30 years.”
Several funds have already announced their FY22–23 returns with AustralianSuper returning 8.2 per cent, Australian Retirement Trust returning 10 per cent, and HESTA returning 9.5 per cent.
Rappell foresees funds struggling to meet their inflation plus objectives over the short term as inflation remains elevated.
“However, super funds have done well to capitalise on the opportunities available to ensure members’ super account balances continue to grow,” Rappell said.
“While the current cost of living is certainly putting pressure on many Australians, superannuation continues to play its part for people’s longer-term financial outcomes.”
The median balanced pension option was up an estimated 1.3 per cent over June and the median growth option rose by 1.6 per cent.
Meanwhile, the median capital stable option is estimated to deliver a 0.3 per cent return for the month.
In the long term, the average annual return since the inception of the superannuation system is 7.1 per cent, emphasising the importance of a long-term strategy, Rappell said.
“Twelve months ago, we did not anticipate an 8 per cent return for this year and so, many people would see this as a positive. Further, long-term returns remaining strong. However, we expect the ups and downs observed over the last 12 months to continue and members should be prepared for their balances to fluctuate,” Rappell said.
For those not approaching retirement, Rappell reminds that market moves in the short term “are not likely to be what you are thinking about when you retire in 20 or 30 years’ time”.
AUTHOR
Rhea Nath
Rhea L Nath is a journalist on Super Review and InvestorDaily, with a focus on funds management, superannuation, and institutional investment. Previously, she covered small business and entrepreneurship news at Dynamic Business and multicultural issues at Indian Link Media Group. In 2022, she was named Young Journalist of the Year at the NSW Premier’s Multicultural Communications Awards.
Recommended for you
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
