Australian superannuation funds have performed strongly against their overseas counterparts according to an analysis from an industry body.
The Association of Superannuation Funds of Australia (ASFA) has compared the performance of super funds to pension funds in other countries to 30 December 2019.
Using Chant West data, it noted an average annual real return over five years to December 2019 of 6.3 per cent and for 10 years it was 5.8 per cent.
In contrast, the average real return figures for the US, drawn from OECD data, were 2.1 per cent over five years and 3 per cent for 10 years.
Looking at ASFA’s selection of OECD countries, Australia reigned above countries such as the Netherlands with an average annual return over five years of 4.7 per cent, although it fell below the 10-year annual return of 6.2 per cent.
Other countries below Australia included Canada (five-year return of 4.1 per cent and 10-year of 5.1 per cent) and Denmark (4.7 per cent and 6.2 per cent for five and 10 years respectively).
The average balanced investment option in super had copped losses during the COVID-19 market volatility, which had wiped 15 per cent from the value of the average portfolio initially, but funds have managed to start rebounding.
ASFA noted over the long-term, fund members in default investment options have “done well”.
For a person aged 35 at the end of 2010 with a super balance of $35,000 and earning average wages over 10 years, it calculated they are set to have a balance at the end of 2020 of $140,000, assuming the fund’s average real return of 5.8 per cent per annum, with nominal investment returns adjusted by the increase in CPI.
The body also pointed to the average balanced option recouping losses caused by the COVID-19 crisis.
ASFA chief executive Martin Fahy, said: “It’s a remarkable feat for funds to reverse the significant losses anticipated in March and April as the Australian share market fell 37 per cent from peak to trough.”
“After a decade of strong, and in some cases, double-digit investment returns, super funds’ diversified investment strategies continue to deliver for the benefit of members, amid hugely difficult global conditions.”
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
Superannuation fund members are spending almost $35 billion on fees every year according to a new report, which has also named AMP, OnePath ...