The low investment return climate has been reflected in Australia’s major superannuation funds, with the median growth fund returning three per cent in 2015/16, according to Chant West.
The returns were significantly lower than the previous years (15.6 per cent in 2012/13, 12.8 per cent in 2013/14, and 9.8 per cent in 2014/15), but Chant West director, Warren Chant, said members should not be concerned given the uncertain global political and economic environment.
He also said the positive returns this year could be attributed to the benefits of diversification.
“Of the main asset sectors, Australian shares only just made it into positive territory and global shares lost ground, but despite that the median growth fund still produced a return of three per cent,” he said.
“That’s because these funds are so well diversified across a wide range of growth and defensive asset sectors, including alternative and unlisted assets, they can successfully smooth out returns when listed share markets are struggling.”
Those funds that performed well had higher allocations to unlisted assets and Australian listed property, and lower exposure to shares.
QSuper Balanced was the top performing growth fund, returning 7.6 per cent, followed by BUSSQ Balanced Growth (seven per cent), UniSuper Balanced (5.9 per cent), and Catholic Super Balanced (MySuper) (5.7 per cent).
Australian shares returned only 0.9 per cent for the 2015/16 financial year, while hedged international shares decreased by 2.7 per cent. However, the depreciation of the Australian dollar meant this resulted in a small gain of 0.4 per cent in unhedged terms.
Australian listed property, on the other hand, was the most robust asset sector, with returns of 24.6 per cent. Unlisted Australian and global listed property produced returns of 12.7 per cent and 12.3 per cent respectively.
Australian and international bonds gained seven per cent and 9.3 per cent respectively, beating the cash return of 2.2 per cent.
Industry funds outperformed retail funds over the year, returning 4.3 per cent versus 1.9 per cent. Industry funds returned 6.8 per cent per annum against 5.5 per cent for retail funds over the 15 years to June.
