Resilient share markets drive super returns

Superannuation funds delivered a fifth consecutive positive annual return of 7.7 per cent in 2016 as a result of resilient Australian and global share markets, according to Chant West.

Chant West's latest growth super fund report found Catholic Super and Hostplus were tied for the top return spot at 10.1 per cent, followed by Cbus Growth (9.6 per cent), and CareSuper Balanced (9.4 per cent).

Chant West director, Warren Chant, said: "Members should be very pleased with the 2016 result, which was achieved against a backdrop of unsettled politics and a relatively weak economic environment".

Chant said the three key stories in 2016 were the shock Brexit vote, the surprising Donald Trump election victory, and the timing of the second US interest rate hike.

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"All of these created uncertainty, but share markets again proved how resilient they can be," he said.

"Investors chose to focus on the gradual improvement in the US economy and what that might mean for global growth, and as a result international shares returned 8.9 per cent in hedged terms and 7.9 per cent unhedged. Australian shares did even better, returning a healthy 11.8 per cent."

The report found of the traditional sectors, Australian listed property was the best performer with a return of 13.2 per cent. Unlisted Australian and global listed property produced returns of 11.1 per cent and six per cent respectively.

"The better performing funds were generally those that had higher allocations to Australian shares, Australian listed property, unlisted property and infrastructure. Those that kept more of their defensive assets in bonds rather than cash would also have benefited," Chant said.

Industry funds outperformed retail funds over the year, returning 8.2 per cent versus 6.9 per cent.

"Industry funds also hold the advantage over the longer term, having returned 5.5 per cent per annum against 4.6 per cent for retail funds over the 10 years to December 2016," the report said.