Super funds have remained in positive territory for the 2025–26 financial year despite a sharp sell-off in March, with Chant West estimating the median growth fund has still returned about 2.5 per cent so far this financial year.
The research house said the median growth fund, which holds 61 to 80 per cent in growth assets, gained 1.1 per cent in February, before escalating conflict in the Middle East rattled markets in early March.
Higher oil prices and renewed inflation concerns have since weighed on sharemarkets, with Chant West estimating the median growth fund is down 3.8 per cent so far, as of 23 March, dragging the financial-year-to-date return back to around 2.5 per cent.
Chant West head of superannuation investment research Mano Mohankumar said members should avoid overreacting to short-term market weakness.
“It’s critical for members to keep in mind that super is a long-term investment and there will inevitably be periods of market weakness through their super journey,” he said.
While some members may feel uneasy seeing balances fall, Mohankumar said most can afford to remain patient, including many older Australians.
“We recognise that members have different levels of comfort when their balance goes backwards, [but] the majority can afford to remain patient, including many older members,” he said.
He said many Australians do not withdraw all of their super as a lump sum at retirement, meaning a substantial portion often remains invested in the pension phase for years.
“In reality, their investment horizon is longer than they might think.”
Mohankumar also warned against switching into lower-risk options or cash during sharp downturns in an attempt to time the market.
“Far more often than not, that approach results in poorer long-term outcomes than if they stay the course,” he said. “Not only do they crystalise their losses, but also risk missing part or all of the subsequent market rebound.”
He said members considering a switch should seek professional advice rather than making reactive decisions in volatile conditions.
“We would encourage those members who are thinking of switching options to see a financial adviser,” he said.
The comments come after three consecutive years of strong super fund performance, which Mohankumar said should help frame the current period of weakness in context.
“It’s also important to remember that super funds delivered strong results in each of the previous three financial years – 9.2 per cent in FY23, 9.1 per cent in FY24 and 10.4 per cent in FY25,” he said. “Returns at those levels shouldn’t be expected every year, but importantly, super funds continue to deliver on their longer-term return and risk objectives.”
Chant West said all traditional diversified risk categories in its Super Fund Performance Survey, from all growth to conservative, had generally met their long-term return objectives to the end of February. Those targets typically range from CPI plus 1.5 per cent for conservative funds to CPI plus 4.25 per cent for all growth funds.
Mohankumar said the long-term record remained the more meaningful measure, particularly given MySuper products have only been operating for just over 12 years.
“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 said.
He added that even over the past 20 years, a period spanning the global financial crisis, the COVID-19 shock and the inflation-driven sell-off of 2022, super funds had continued to outperform their typical objectives.
“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 6.8 per cent p.a., which is still well ahead of the typical objective,” he said.
Chant West said rolling 10-year returns have exceeded target for most periods since compulsory super began, with the main exception occurring between mid-2008 and late-2017 due to the lasting impact of the global financial crisis.
During the 16 months to the end of February 2009, growth funds lost about 26 per cent on average.
