Super funds eye third consecutive year of strong returns amid market resilience

Australia’s superannuation funds are on track to post another year of strong performance, with the median growth fund returning an estimated 9 per cent for the 2025 financial year, according to research from Chant West.

Following a solid 2.7 per cent gain in May and with equity markets continuing to rise in June, growth funds – typically holding 61–80 per cent in growth assets – are poised to record their third consecutive year of returns around the 9 per cent mark. 

This would mark the 14th positive year out of the past 16 for superannuation investors.

“All major asset classes have delivered positive returns over the period,” said senior investment research manager, Mano Mohankumar.

“A final return close to 9 per cent would be an astonishing result in light of the volatility we’ve seen this past year.”

The robust FY25 performance comes despite several episodes of volatility, including geopolitical tensions and policy-driven market shifts. 

Sharemarkets were rattled in April following US President Donald Trump’s so-called “Liberation Day” tariff announcements, but a subsequent softening of stance helped fuel a sharp equity rebound into June. More recently, risk-off sentiment has emerged in response to escalating conflict in the Middle East.

“This year’s result would follow the strong returns for FY23 and FY24 when growth options returned 9.2 per cent and 9.1 per cent, respectively… Most importantly, super funds continue to meet their long-term return and risk objectives,” Mohankumar said.

Chant West data showed the median growth fund has returned 8 per cent per annum since the introduction of compulsory super in 1992, comfortably outpacing inflation (2.7 per cent) and delivering a real return of 5.3 per cent per year, well above the typical 3.5 per cent target.

Even over the past 20 years – spanning the GFC, COVID-19, and the inflation-driven rate hikes of 2022 – super funds have averaged annual returns of 7.1 per cent. 

“On the risk side, there have only been five negative years over the entire period, which translates to less than one year in every six. Again, funds have done better than their typical long-term risk objective which is one negative return in every five years, on average,” said Mohankumar.

Over the month of May, the all growth fund (96–100 per cent in growth assets) was up 4.0 per cent, while the balanced option returned 2.0 per cent. 

According to Chant West, all risk categories have generally met their typical long-term return objectives, which generally range from CPI + 1.5 per cent for conservative funds to CPI + 4.25 per cent for all growth.