Super results as funds ride surging markets

SUPER funds have delivered their second strongest year since compulsory superannuation was introduced, with the median growth fund returning 18 per cent in the 2021 financial year, according to research house Chant West.

The only better financial year was 1996-97, when the median growth fund – the most popular super investment option – returned 19.4 per cent.

But the also popular balanced investment option saw some strong performers, with fellow research house Super Ratings research showing the top 20 performers in the category each returned more than 18 per cent over the same period.

According to Chant West, the top performing growth fund was Mine Super, an industry fund for coal mine workers, that returned 22.6 per cent.

But the bottom end of the range still performed strongly, Chant West said, with the worst performing fund in the category returning 13 per cent.

Super Ratings said the strongest performing balanced fund was the Qantas Super Gateway Growth Fund, which qualifies as a balanced option due to its more conservative asset allocation. It returned 22 per cent, boosting its average 10 year return to 8.1 per cent.

Due to methodology differences, Chant West counted Australiansuper’s balanced fund as a growth fund while Super Ratings considers it a balanced fund – but both researches agreed it was the strongest overall performer over the past decade, with an average 9.7 per cent return.

Chant West senior investment research manager Mano Mohankumar said the sector’s strong performance highlighted the resilience and prudent diversification strategies of the funds.

“Despite the battering that share markets took over February and March 2020, the diversification built into growth funds enabled them to limit the damage to a small loss of 0.6 per cent for FY20 which was a much better result than expected,” he said.

“And in FY21, with over 50 per cent allocated to listed shares, these funds were able to capture a meaningful proportion of the upside as markets staged a strong and sustained rally.

“In fact, growth funds finished FY21 more than 10 per cent above the pre-covid crisis high that was reached at the end of January 2020.”

Superratings Executive Director Kirby Rappell said the funds that took the biggest hits in 2020 were posting strong returns for FY21.

But median returns still fell short of the global recovery in shares: Australian shares gained 28.5 per cent over the financial year while internationals surged 37.1 per cent.