Chant West’s latest data has revealed “stellar” results for superannuation funds in 2024, with the median growth fund returning 11.4 per cent, well ahead of the typical long-term return objective of approximately 6 per cent.
International share markets were a key driver of super’s strong 2024 performance, with a 21.2 per cent return on a currency-hedged basis, led by the tech and financial sectors, according to Chant West.
On average, growth funds have 30 per cent, in total, invested in international shares and 25 per cent allocated to Australian shares.
“While not reaching the same heights, Australian shares, with a return of 11.4 per cent, also contributed meaningfully to the strong CY24 result. The other point to note is that all other major asset classes, with the exception of unlisted property, also delivered positive returns for the year,” said Chant West senior investment research manager, Mano Mohankumar.
He noted that private equity and unlisted infrastructure are estimated to have posted gains nearing 10 per cent for FY2023–24, while unlisted property likely saw a mid-single-digit loss.
“We’re still in the process of collecting final returns for unlisted asset classes such as unlisted property, unlisted infrastructure and private equity. While the loss for unlisted property over FY24 is likely to be around the mid-single digits on average, we estimate that private equity and unlisted infrastructure finished the year with gains in the 7 per cent to 10 per cent range on average,” Mohankumar said.
“Listed real assets were also up, with Australian listed property returning 17.6 per cent, while international listed property and international listed infrastructure yielded gains of 2.8 per cent and 11.9 per cent, respectively. Traditional defensive sectors were also up with cash, Australian bonds and international bonds advancing 4.5 per cent, 2.9 per cent and 2.2 per cent, respectively.”
According to Chant West, the top-performing growth fund for the year was UniSuper with a return of 14.7 per cent, followed by CFS’ growth option with 13.6 per cent and Mine Super’s growth offering with 13.4 per cent.
Next on the ladder was Vanguard Super SaveSmart Growth with 12.9 per cent, smartMonday Balanced Growth with 12.8 per cent and Mercer Growth with 12.7 per cent.
Rounding out the top 10 were legalsuper MySuper Balanced with 12.4 per cent, Aware Super Balanced with an equal 12.4 per cent, AMP Future Directions Balanced with 12.2 per cent and Brighter Super Balanced with 12.1 per cent.
Over a period of 10 years, Chant West said Hostplus Balanced was the top-performing growth fund with returns of 8.4 per cent per annum.
2024 returns not typical
Reflecting on the funds’ strong 2024 performance, Mohankumar cautioned that such a level of return should not be considered normal.
“The typical long-term return objective for growth funds is to beat inflation by 3.5 per cent p.a., which translates to just over 6 per cent p.a. Since the introduction of compulsory super, the annualised return is 8 per cent and the annual CPI increase is 2.6 per cent, giving a real return of 5.4 per cent p.a. – well above that 3.5 per cent target,” he said.
“Even looking at the past 20 years, which includes three major share market downturns – the GFC in 2007–2009, COVID-19 in 2020 and the high inflation and rising interest rates in 2022 – super funds have returned 7.1 per cent p.a., which is still comfortably ahead of the typical objective.”
