Chant West’s data suggests that QSuper, a not-for-profit fund with a focus on unlisted assets such as property and UniSuper which has a strong focus on listed assets, tied first for growth with 9.9 per cent returns to its members.
Overall, there have been strong results for Australian super, with the worst-performing category returning 4.3 per cent for investors.
Chant West senior investment manager Mano Mohankumar believes members should be happy as funds beat targets.
“Fund members should be very pleased with the 2018-19 return of 7 per cent. It’s better than what most experts predicted a year ago, and it’s about 5.5 per cent above the current rate of inflation – well above the typical long-term objective, which is to beat inflation by 3.5 per cent,” said Mr Mohankumar.
Focus on long-term growth
Growth funds are those that have a 61 to 80 per cent allocation to growth assets and are the ones in which most Australians are invested in.
Despite some funds having a strong year, Mr Mohankumar has reminded members to think long term with superannuation and not chase short-term gains.
“By all means, look at what your fund delivered over the year, but it’s even more important to know what its long-term objectives are and whether it’s achieving them. Most growth funds aim to beat inflation by 3 per cent to 4 per cent a year. We now have data going back 27 years to July 1992, the start of compulsory super,” said Mr Mohankumar.
According to Chant West, risks in Australian super are low due to only having three years of negative growth out of 27 since compulsory super began in Australia.
“Returns are important but so is risk, and most funds also set themselves a risk objective. Risk is normally expressed as the likelihood of a negative annual return, and typically a growth fund would aim to post no more than one negative return in five years on average,” said Mr Mohankumar.
To read more about how an overhaul of the Australian superannuation system could see Australians retiring up to $190,000 better off click here.
Cameron Micallef is a journalist at Nest Egg, writing primarily about personal wealth and economic markets.
Prior to this, Cameron worked for Australian Associated Press. He graduated from the University of Wollongong with a double degree in communications and commerce.