Super funds maintain momentum heading into year end

Super funds have continued their growth streak, with the median growth fund on pace for a healthy calendar year return.

Super funds have advanced for the seventh consecutive month in October, with the median growth fund — holding between 61 and 80 per cent in growth assets — returning 1.2 per cent over the month, according to Chant West.

Despite some share market jitters in November, Chant West estimated the median growth fund is up 7.8 per cent with six weeks remaining in the 2025 calendar year.

Chant West head of superannuation investment research Mano Mohankumar commented that a final result near that level would represent a solid outcome given the global backdrop.

“That return is well ahead of the typical long-term return objective which translates to about 6 per cent,” Mohankumar said.

“Super fund members should also remember that this year’s result follows two exceptional years, with returns of 9.9 per cent in CY23 and 11.4 per cent in CY24. Given the strength of share markets over the past three years, super fund members in higher risk portfolios have fared even better.”

Mohankumar added that October’s healthy result was driven by strong developed international share markets, which rose 2.6 per cent and 3.3 per cent in hedged and unhedged terms respectively. 

“Markets were buoyed by easing of trade tensions during the month, strong corporate earnings and optimism around AI. 

"Emerging markets shares performed even better, returning an impressive 5.5 per cent. Back at home, Australian shares yielded a small positive return of 0.4 per cent. Over the same period, Australian and international bonds gained 0.4 per cent and 0.7 per cent, respectively.”

Chant West data shows all traditional diversified risk categories, ranging from all growth to conservative, have met or exceeded their long-term return objectives. These typically range from CPI plus 1.5 per cent for conservative funds to CPI plus 4.25 per cent for all growth options.
 

Long-term gains hold firm

With MySuper products now nearing 12 years of operation, Mohankumar emphasised that superannuation remains a long-term investment.

“Since the introduction of compulsory super in July 1992, the median growth fund has returned 8 per cent per annum. The annual CPI increase over the same period is 2.7 per cent, giving a real return of 5.3 per cent per annum – well above the typical 3.5 per cent target,” he said

“Even looking at the past 20 years, which includes three major share market downturns – the GFC in 2007–2009, COVID-19 in 2020, and the high inflation and rising interest rates in 2022 – super funds have returned 7.1 per cent per annum, which is still comfortably ahead of the typical objective.”

According to Chant West, the median growth fund has exceeded its return objective for most rolling 10-year periods, consistent with the long-term focus of superannuation. 

The only exceptions were during and immediately after the global financial crisis, when growth funds lost about 26 per cent on average over the 16 months to February 2009.