The median growth fund returned 15.6 per cent on the back of a strong year for listed property and shares, led by BT’s Super For Life 1960s Lifestage - the best at 18.6 per cent.
REST Core (18.4 per cent) was the next best and corporate fund, Telstra Super’s balanced option (16.9 per cent) and HOSTPLUS Balanced (16.6 per cent) were the only other non-retail funds in the top 10. Options from Aon, AMP, CFS, Russell, AXA and IOOF returned between 17.9 per cent and 16.8 per cent.
Even the worst performing fund in the growth category returned a healthy 10.2 per cent, according to Chant West.
Chant West director Warren Chant said the fact there were seven retail master trusts in the top 10 was the result of the retail sector typically having a higher average weighting to listed shares and property.
However, this was only the third time in the past 10 years retail master trusts outperformed industry funds, which maintain their dominance long term, Chant West stated.
“Who would have thought, in the dark days of February 2009 when markets hit their low point in the wake of the global financial crisis, the median growth fund would have recovered by over 50 per cent in little more than four years?” Chant West director Warren Chant said.
“We’ve now had four consecutive positive financial year returns averaging about 8.8 per cent per annum. From that low point in early 2009, the median fund has not only recovered all its post-GFC losses, but is now sitting about 10.5 per cent above its pre-GFC high, which was achieved in October 2007. That’s a major turnaround.”
In addition to growth funds benefiting from exposure to listed shares and property, many funds also benefited from the lower Australian dollar, according to Chant West.
Mr Chant said this highlighted the dangers of trying to time the market.
He also cautioned against reading too much into short-term results, adding that super is a long-term investment. Growth funds typically aim to beat inflation by three to four per cent net of fees and tax, with a risk objective of a negative return no more than once per five years, and funds have achieved those objectives in the 21 years of compulsory super, Mr Chant said.
“The bottom line is, over the 21 years in which we’ve had compulsory super, Australia’s major funds have done what they set out to do,” he said.
“That’s a key message they should be getting out to their members because it’s one that instils confidence in super, encourages people to take more interest in it and really get engaged with what is, after all, their biggest financial asset.”
