Despite turbulent world events, including the war in the Middle East, Australian superannuation funds have chalked up a fourth straight year of strong returns, with UniSuper Growth edging out its peers to be the best performer over the period.
Excellent superannuation returns once again
Data released by Chant West indicates that the median growth superannuation fund, which is 61% to 80% invested in growth assets, gained a healthy 9.5% during FY26.
Chant West said this followed returns of 9.2% in FY23, 9.1% in FY24, and 10.4% in FY25, “taking the cumulative return to an impressive 44% over the past four years”.
Members invested in higher-risk options would generally have enjoyed even better outcomes, the analytics company said.
Chant West Head of Super Investment Mano Mohankumar said the FY26 result was once again driven by international shares, but it also helped that nearly all asset classes generated positive returns over the period.
He added:
International shares surged 25.5% in hedged terms, supported by continued enthusiasm for AI and robust corporate earnings. Despite the Australian dollar’s appreciation against most major currencies, the return in unhedged terms delivered an impressive 17%. International shares have the highest allocation within a typical growth fund, accounting for about 31% on average. By comparison, Australian shares, which on average has a weighting of 24%, returned a modest 6.2% over the year.
Mr Mohankumar said generally speaking, funds with a higher allocation to international shares performed better.
He added:
Diversification also provided some benefit given the wide dispersion of returns across asset classes, though it would have helped if you had lower allocations to traditional defensive assets. Australian bonds, international bonds and cash returned 1.5%, 2.9% and 3.9%, respectively, making them among the weakest performing asset classes over the year. The only asset class to finish in negative territory was Australian listed property, which declined 1.8%. In contrast, international listed real assets performed exceptionally well, with international listed infrastructure and listed property returning 17.2% and 14.3%, respectively.
Which were the best-performing superannuation funds?
Among growth funds, the top-performing growth funds for the year were UniSuper Growth with 12.3%, NGS Super Diversified with 11.5%, CFS Firstchoice Growth with 11.5%, and Hostplus Balanced with 10.8%.
Mr Mohankumar said that while super funds had delivered four straight years of returns of 9% or more, that level of return shouldn’t be thought of as normal.
He added:
The typical long-term return objective for growth funds is to beat inflation by 3.5% p.a., which translates to roughly 6% p.a. Since the introduction of compulsory super, the annualised return is 8% and the annual CPI increase is 2.7%, giving a real return of 5.3% p.a. â well above that 3.5% target. Even looking at the past 20 years, which includes three major share market downturns â the GFC in 2007-2009, COVID-19 in 2020 and the high inflation and rising interest rates in 2022 â super funds have returned 6.9% p.a., which is still comfortably ahead of the typical objective.
The post Which superannuation fund outperformed its peers last financial year? appeared first on The Motley Fool Australia.
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