Are you with the top 10 super fund of 2022–23?

ESSSuper has beat out mega funds like Australian Retirement Trust and Aware Super to deliver the top Balanced option performance for the year ended June 2023, according to SuperRatings. 

The $34 billion fund delivered a 13.3 per cent return in the last 12 months, followed by Vision Super (11 per cent) and Brighter Super (10.6 per cent). 

The top five performing balanced options were rounded up by UniSuper (10.3 per cent) and Equip Super (10.1 per cent). 

SuperRatings said fund options classed as balanced are those with between 60 and 70 per cent of their portfolio invested in growth assets.

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According to ESSSuper’s group executive for investments, Daniel Selioutine, the fund’s performance follows a “multi-year program of reorienting the portfolio towards areas of competitive advantage.”

He said: “Our shorter-term performance is explained by our positioning in equities and bonds, however, our dedicated investment team remains firmly focused on delivering longer-term investment outcomes to members.”

In comparison, Australia’s second-largest super fund, $240 billion fund Australian Retirement Trust, came in the sixth position with a 10 per cent return in its Balanced option while $160 billion fund Aware Super came in eighth with a 9.7 per cent return. 

Source: SuperRatings, July 2023

SuperRatings observed that in 2023, funds have managed to deliver a competitive outcome during uncertain times, with funds that invested between 60 and 76 per cent of their portfolio in growth assets delivering strong results for their members. 

“The second half of the financial year provided the majority of gains for funds, led by a rally in international shares,” the research house stated.

“A key theme for returns in 2023 was that funds with higher exposure to shares generally outperformed for the year, while those with greater exposure to unlisted property and alternatives reported more subdued outcomes. As a result, members who were invested in index funds generally did quite well, given the strong focus on listed shares in these options.”

Looking at passive balanced options over the last 12 months, $74 billion fund HESTA took the pole position with a 12.5 per cent return. 

SuperRatings added: “While this sits slightly lower than the top-performing balanced option, over the past 12 months, balanced index options have tended to outperform their more actively managed equivalents.”

This was followed by Rest (12.4 per cent) and Hostplus (12.3 per cent). 

Sustainable balanced options also delivered strong performance, with Raiz Super’s Emerald investment option matching the top-performing balanced option with a return of 13.3 per cent.

Other top performers in this category were Super SA (12.1 per cent), UniSuper (11 per cent), Aware Super (10.9 per cent), and Future Super (10.5 per cent). 

Notably, Future Super received an ASIC infringement notice in May this year over alleged greenwashing for a 2019 Facebook post that “may have been false or misleading by overstating the positive environmental impact of the fund.” 

Looking ahead

Over a 10-year horizon, Hostplus’ Balanced option remained the highest-performing balanced option with 8.9 per cent returns per annum. 

The super, which had some of the largest exposures to property, recently announced it would be discontinuing its single sector property and infrastructure investment options from 1 October 2023.

Instead, it would introduce six new “pre-mixed” investment options for its members.

SuperRatings’ executive director, Kirby Rappell added: “We observed funds reviewing and writing down their unlisted asset valuations at the end of the financial year, contributing to the moderately weaker annual performance of funds with significant exposure to these assets in FY23.

“However, over the long term, they have added value to member outcomes, with many of the top-performing options over 10 years having exposure to alternative assets.”

For FY23, the research house noted the continued trend of increased fluctuation in member account balances, with five out of the 12 months in the year having negative performance. 

“Since the onset of the COVID-19 pandemic, managing volatility has really come back into focus for funds after almost a decade of steady gains. The sharp rise in inflation and global uncertainty has been a constant over the past couple of years and we expect this to persist,” Rappell said.