Superannuation funds are on track to deliver a fourth consecutive year of strong returns, with the median growth fund estimated to have gained about 9 per cent for the 2025–26 financial year with less than two weeks remaining.
According to Chant West, the median growth fund, which holds between 61 per cent and 80 per cent in growth assets, rose 2.1 per cent in May following a strong rebound in global share markets.
Head of super investment research, Mano Mohankumar, said international listed shares had been the primary driver of performance during the year.
“It also helped that all asset classes have delivered positive returns over the period with the exception of Australian REITs, to which super funds have very little exposure.
“The FY26 experience is another timely reminder of the importance of maintaining a long-term perspective and not getting distracted by short-term market noise. In late March, a return in the vicinity of 9 per cent for growth funds would have appeared unlikely following the significant share market pullback, sparked by the US-Iran conflict and concerns around interest rates amid rising inflation.
“However, since then we’ve seen international share markets rebound strongly, albeit with some volatility, supported by robust corporate earnings, optimism around easing tensions in the Middle East and continued enthusiasm for AI investment.
“A final return close to 9 per cent would mark four consecutive years of strong performance, following returns of 9.2 per cent in FY23, 9.1 per cent in FY24 and 10.4 per cent in FY25. It would also represent the 15th positive year out of the last 17. Most importantly, super funds continue to meet their long-term return and risk objectives,” he said.
If achieved, a return near 9 per cent would extend a prolonged period of positive outcomes for members and reinforce the resilience of diversified superannuation portfolios despite periodic market shocks.
Chant West said the median growth fund has returned 8 per cent per annum since the introduction of compulsory super in July 1992.
Over the same period, annual inflation averaged 2.7 per cent, resulting in a real return of 5.3 per cent per annum, comfortably above the typical long-term objective of 3.5 per cent.
Performance has also remained strong over the past two decades despite major market disruptions, including the global financial crisis, the COVID-19 pandemic and the inflation and interest rate shocks of 2022.
Even across that period, median growth funds delivered returns of 6.8 per cent per annum, remaining comfortably ahead of their typical long-term objectives.
“On the risk side, there have only been five negative years over the entire period, which translates to close to one year in every seven. Again, funds have done better than their typical long-term risk objective which is one negative return in every five years, on average,” Mohankumar said.
Chant West’s survey showed all traditional diversified risk categories generated positive returns to the end of May and have generally met their long-term objectives, which range from CPI plus 1.5 per cent for conservative funds to CPI plus 4.25 per cent for all growth funds.
The research also found the median growth fund has exceeded its return objective over most rolling 10-year periods since compulsory super was introduced, with the main exception occurring between mid-2008 and late-2017 following the severe impact of the global financial crisis.
During the 16-month period from the end of October 2007 to the end of February 2009, growth funds lost about 26 per cent on average, creating a drag on longer-term performance measures for several years.
