Tech exposures bolster stronger-than-expected super returns in FY24: SuperRatings

3 July 2024
| By Rhea Nath |
image
image
expand image

Super funds have demonstrated a stronger recovery from losses at the start of the financial year, with the median balanced option poised for an annual result just shy of 9 per cent.

For the year to June 2024, the median balanced option stands at around 8.8 per cent, displaying “a strong turnaround” since November 2023, said Kirby Rappell, executive director of SuperRatings.

He said top performers for the year would be “handing members double-digit returns for the year.”

The median passive balanced option, too, looked to return 11.6 per cent for the year.

The annual result comes on the heels of another positive result in June, which saw the median balanced option rise 0.7 per cent, the median growth option rise 0.8 per cent, and the more defensively positioned capital stable options, holding cash and bonds, rise 0.6 per cent.

Pension returns were also on an upward trajectory, delivering 0.9 per cent for the median balanced option, 1 per cent for the median growth option, and 0.6 per cent for the median capital option in June. 

SuperRatings observed that, in the financial year 2024, international shares were the standout performers for funds, with the sector estimated to return 17 per cent as an AI rally, and associated industries, saw a small group of shares hit unprecedented highs.

Additionally, Australian shares made a strong contribution to super fund returns, with an estimated 11 per cent return for the sector.

Unpacking this strong performance, Rappell noted technology shares in the US, and bank shares in Australia, have “really driven” this year’s outcomes.

This means funds with higher levels of investments in these assets will have done well.

He said: “We expect all major asset classes to contribute positively to fund returns for the year, although the fixed interest and property sectors had a tougher year and are expected to make the smallest contributions.”

Still, he pointed out “risks remain” amid the robust sharemarket performance. In particular, he pointed to the trajectory for inflation in Australia and geopolitical risks emerging from ongoing wars and the upcoming presidential elections in the US.

Earlier this year, SuperRatings had flagged double-digit super returns as a possibility, with the estimated return for the first nine months of the financial year standing at 8.8 per cent.

However, in May, sticky inflation and the reality of a higher-for-longer scenario caught up with investment markets, with funds witnessing their first negative return since November 2023, subsequently bringing the upward momentum to a halt.

Read more about:

AUTHOR

Add new comment

The content of this field is kept private and will not be shown publicly.

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

6 months 3 weeks ago
Kevin Gorman

Super director remuneration ...

6 months 4 weeks ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

6 months 4 weeks ago

Submissions and nominations have opened for the inaugural Momentum Media Australian AI Awards 2024, which champions the wealth management industry for contributing to the...

3 hours ago

According to economists, interest rates are unlikely to rise again despite stronger-than-expected inflation data that has made Australia an outlier among the G10....

1 day 2 hours ago

It has announced returns of more than 16 per cent across its growth and global index options....

2 days 2 hours ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND