The 2022–23 financial year saw an 8.22 per cent return for AustralianSuper members invested in the balanced investment option.
Mark Delaney, chief investment officer at AustralianSuper, said the strong result came amid ongoing global economic challenges and writedowns in some key unlisted assets as a result of difficult global investment conditions.
“The rebound in investment performance this financial year is an important reminder to look past short-term investment returns and focus on consistent long-term performance,” Mr Delaney said.
AustralianSuper said that its balanced option has returned an average of 8.23 per cent a year over three years, 6.72 per cent a year over five years, 8.6 per cent a year over 10 years, and 7.11 per cent a year over 15 years to 30 June 2023.
“The recovery in returns has been driven by strong growth in equity markets globally, with the performance of the technology sector a key driver,” Mr Delaney said.
“Overall, investment market returns have been better than we expected and economic growth has proved relatively resilient with consumer spending holding up well over the year.”
Despite this, he said there are still “significant challenges” in the global economy going forward, but AustralianSuper has “positioned the portfolio to respond to these and to take advantage of opportunities that will likely present themselves as we progress through the cycle”.
“Over the year, we have also responded to a variety of significant investment challenges, including writedowns in some property assets to account for falling values,” Mr Delaney added.
AustralianSuper said that following the financial year return, the fund now has $300 billion in member assets under management (AUM), which it forecast would blow out to more than $500 billion over the next four or five years.
According to the super fund, more than 1,200 Australians join its ranks every day, bringing with them an annual net inflow of over $20 billion in the last year.
Mr Delaney again stressed that even with a strong return this year, members should keep their focus on long-term performance rather than year-on-year results.
“There are challenges ahead in the higher interest rate environment and there are headwinds to economic growth, and while inflation is abating it still remains above central bank targets,” he said.
“Our overall outlook suggests that we will continue to see weaker economic growth, continued volatility in investment markets and moderate returns over the next few years. This will benefit patient investors like AustralianSuper who can invest across the long-term economic cycle.”
Speaking at the Morningstar Investment Conference in May, Mr Delany said that a recession in the US and Australia was “most likely”, and that the fund’s portfolio is positioned for that likelihood.
“Our view is a recession is most likely and we’ve positioned the portfolio for that, so we’re short stocks and long bonds,” he said.
Mr Delaney said that while timing a recession will always be “very difficult”, seeing a recession as “the destination” is more important than being right about the timing.
“So, we’ll just have to live through the volatility until that occurs,” he added.
