Fund hosts best returns

Superannuation league table topped with plus size gains

THE head of Australia’s bestperforming superannuation fund has praised banking regulators for their efforts to cool the housing market.

House prices no longer loom as a risk to the economy following efforts to strip heat from the market, Hostplus chief David Elia says.

But Mr Elia says he is still wary about the “potential deglobalising” effect of the trade stoush between the US and China, Australia’s biggest trading partner.

Mr Elia, who visited Washington DC last month to look at potential US infrastructure investments, also says Hostplus is “getting closer to making inroads” in that market.

Hostplus will today reveal that its balance fund delivered a return of 12.5 per cent over the year to June, again topping the league table, according to research house SuperRatings.

That figure is down slightly from 13.2 per cent the previous year, when Hostplus was also top of the ladder.

But it is significantly higher than the median return of 9.3 per cent across Australia’s lowfee MySuper funds — the default funds offered to employees — over the past financial year.

The Hostplus MySuper fund has also been the best performing over three, five, seven and 15-year timeframes, but slips slightly down the table measured over the past 10 years, to fifth spot.

Mr Elia said he saw two economic risks that, in the short to medium term, could affect the performance of super funds broadly.

“The first is central banks largely acting in advance of inflation and stifling economic growth (by) increasing interest rates,” he said.

Mr Elia said RBA governor Phillip Lowe had sensibly noted there was no case to raise the cash rate here, but rates were still broadly rising globally.

The housing market did not loom as a risk thanks to the good work of the RBA and regulators, he said.

“The housing market seems — through proper regulation and tightening lending practices — to have cooled off,” Mr Elia said.

“Everything I now read seems to talk about the property market coming off.”

The other economic threat was that of “trade wars and potential de-globalisation”, he said, in a nod to the trade conflict between China and the US.

Across its funds, Hostplus has $34 billion under management.

Mr Elia said the fund’s success over the past year validated its decision to “avoid the noise in the market”, whereby many other funds moved into cash in preparation for a downturn.

Hostplus was planning to stick to its more active equity management model, he said

“We have a very low allocation to index hugging managers.”

Mr Elia said Hostplus would also maintain its focus on unlisted assets, which make up 47 per cent of its portfolio.

Hostplus is one of 30 super funds that was asked to make a submission for the next round of hearings, starting on August 6, in the financial services royal commission.