Superannuation funds recovered strongly in April as global share markets rebounded from March’s volatility, placing the sector on track for another solid financial year result.
Research from Chant West showed the median growth fund, which holds between 61 per cent and 80 per cent in growth assets, returned 2.6 per cent in April after falling 3.2 per cent in March.
With international markets also rising through May, Chant West estimated the median growth fund return for FY26 currently sits at 6.4 per cent with around six weeks remaining in the financial year. The sector previously delivered returns of 9.2 per cent in FY23, 9.1 per cent in FY24 and 10.4 per cent in FY25.
Head of superannuation investment research Mano Mohankumar said improving investor sentiment was driven by a ceasefire in the Middle East, despite ongoing uncertainty, alongside solid US corporate earnings.
“Over the month, developed market international shares returned a lofty 9 per cent in hedged terms, led by the technology and communications services sectors amid ongoing investor enthusiasm for AI,” he said.
“With the Australian dollar appreciating against most major currencies, the return in unhedged terms was more modest, but still healthy at 4.4 per cent.”
Mohankumar said emerging markets shares performed even better, gaining 9.3 per cent in unhedged terms, while Australian shares rose 2.3 per cent over the month.
“While not reaching the same heights, Australian shares still generated a solid gain of 2.3 per cent,” he said. “With the risk-on sentiment, returns from bonds were flat with Australian and international bonds up 0.1 per cent and 0.3 per cent, respectively.”
The rebound followed sharp market volatility in March and reflected renewed investor appetite for growth assets, particularly technology stocks tied to the artificial intelligence thematic that has continued to support global equity markets.
Mohankumar said the market swings over the past two months highlighted the importance of maintaining a long-term investment approach within superannuation portfolios.
“The experience over the past two months is a timely reminder that super is a long-term game.
“Members who panicked in March and switched to cash or a lower risk diversified option, not only turned paper losses into real ones, but also missed out on the subsequent market rebound.”
He added that missing even relatively short periods of strong market performance could materially affect retirement outcomes because of the long-term impact of compounding returns.
Chant West said all traditional diversified risk categories in its Super Fund Performance Survey had generally met their long-term return objectives, which range from CPI plus 1.5 per cent for conservative funds to CPI plus 4.25 per cent for all growth strategies.
Mohankumar said MySuper products should be assessed over much longer timeframes rather than shorter periods of market volatility.
“Since the introduction of compulsory super in July 1992, the median growth fund has returned 8 per cent p.a. The annual CPI increase over the same period is 2.7 per cent, giving a real return of 5.3 per cent p.a. – well above the typical 3.5 per cent target.”
He added that super funds had also continued to outperform their long-term objectives over the past 20 years despite navigating major market shocks including the global financial crisis, the COVID-19 pandemic and the inflation and interest rate volatility experienced in 2022.
According to Chant West, rolling 10-year returns for the median growth fund have exceeded their objectives for most periods since compulsory superannuation was introduced, with the notable exception of periods immediately following the global financial crisis, when growth funds lost about 26 per cent on average between October 2007 and February 2009.
