Chant West confirms double-digit calendar year

Superannuation fund ratings house, Chant West has confirmed the good news – the median growth superannuation fund ended the calendar year up 10.8 per cent, delivering a sixth consecutive year of positive annual returns.

In doing so, Chant West founder, Warren Chant said the returns had defied most, if not all, expectations.

AustralianSuper took the top spot in terms of returns with 13.6 per cent, but the company noted that even the worst performing fund in its growth category delivered a respectable 7.6 per cent.

“Growth funds have now delivered six straight positive calendar year returns, averaging over 10 per cent a year,” Chant said. “The last time we saw such a long sequence of positive returns was between 1995 and 2001.”

“The 2017 return of 10.8 per cent is the best result since 2013 when funds surged 17.2 per cent.  It is also more than five per cent ahead of the typical long-term return objective for that category which is CPI + 3.5 per cent.  With inflation running at about two per cent, that translates to a target of about 5.5 per cent.

 “Very few people would have predicted such an outstanding result 12 months ago.  Back then, people were nervous about what Donald Trump’s shock victory might lead to.  And that was only months after Europe was thrown into turmoil by the surprise Brexit vote,” he said.

“However, despite all the uncertainty, share markets around the world took it in their stride as investors focused on the improving global economy.  International shares surged 18.7 per cent over the year in hedged terms and 13.4 per cent unhedged, while Australian shares also had an excellent year, gaining 11.9 per cent.

“Shares are still the main drivers of performance, but the major funds are well diversified across a wide range of other sectors including unlisted assets.  The better performing funds in 2017 were those that had higher allocations to listed shares and to unlisted assets generally.  A lower exposure to traditional bonds and cash also helped, given their mediocre returns.”

The Chant West analysis confirmed that industry funds outperformed retail funds over the year, returning 11.6 per cent versus 10 per cent.