SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024.
This found the median balanced fund is expected to return 11.5 per cent in 2024 with the “vast majority” set to return more than 10 per cent.
Although December returns were lower, this was countered by strong returns in the previous 11 months of the year. It said superannuation returns had managed to outpace inflation and withstood the market volatility exhibited throughout the year.
The estimated 11.5 per cent return is almost 20 per cent higher than the 9.6 per cent returns achieved in the 2023 calendar year.
Since 2000, it estimated returns for the median balanced fund were 6.7 per cent per annum.
Final results are expected to be released by individual super funds at the end of January.
SuperRatings classifies a balanced option as one that has 60–76 per cent in growth assets across areas like Australian shares, international shares, property, alternatives, fixed interest, and cash.
Kirby Rappell, executive director at the research house, said: “It has been a year of surprisingly strong and consistent positive returns for the industry where superannuation funds have strongly benefited from international share exposure leading to double digit returns.
“We have continued to see strong performance in equity markets that have been the key driver of this return outcome. Top performing options for 2024 are likely to again be those with high equity exposures. Despite the feeling of uncertainty in market conditions, this has not been seen in 2024 returns.”
Looking at potential returns in 2025, Rappell said there is a chance markets could correct and further market volatility would demonstrate the benefits of a superannuation fund diversified across asset classes.
“Most of this year’s returns have come from share markets, which are now priced at historical highs both in Australia and internationally. A correction in share markets would have a strong flow on effect to member’s superannuation balances and members should be prepared to see ups and downs over the short term,” Rappell said.
“Inflation, particularly in Australia, also continues to be persistent with Australian interest rates likely to come down slowly over time, and cost of living pressures remain elevated.
“The discussion around risk, and particularly the ability of investors to tolerate the ups and downs of the markets seems to have not been central this year. Indeed, with the strength of equity markets in recent times, the benefits of diversification have been more muted, although likely to be front and centre if volatility returns.”
