Double-digit super returns a ‘possibility’ for FY24

Super returns continued to climb in March, raising hopes of delivering double-digit returns by June depending on the performance of this next quarter.

The median balanced option generated a return of 1.9 per cent in March, up from 1.8 per cent for February, taking the estimated return for the first nine months of the financial year to 8.8 per cent.

This signalled a potentially “decent chance” of strong returns for the financial year 2024, according to research house SuperRatings.

The median growth option gained an estimated 2.3 per cent and the median capital stable option also rose by an estimated 1.1 per cent.

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Looking at pensions, the median balanced pension option increased by around 2.2 per cent.

The median capital stable pension option and median growth pension option grew by an estimated 1.2 per cent and 2.6 per cent, respectively.

SuperRatings highlighted these returns have been assisted by strong sharemarkets both in Australia and internationally.

It suggested double-digit returns could be a possibility, “depending on outcomes for the final quarter.”

“We have continued to see fund balances grow, despite ongoing uncertainty over the inflation outlook both here and abroad,” said Kirby Rappell, executive director of SuperRatings.

SuperRatings analysis also explored how superannuation balances have fared since the beginning of January 2020, before the COVID-19 pandemic began to influence markets. 

“Assuming no additional contributions or deductions other than investment fees and taxes, a member who had $50,000 invested in the median balanced option at the beginning of 2020 would now have $64,406, while a member investing solely in an International Shares option would have $74,888 and a member who invested in cash would have a balance of $53,244,” SuperRatings said.

When measured from the depths of the COVID-19 pandemic, the median international shares option within a super fund has returned 69 per cent, it noted, or 17 per cent per annum since the lowest point of the pandemic.

Moreover, while investing in international shares has provided the highest growth, it has come alongside additional uncertainty in account balances each month, given the international index has displayed the largest ups and downs over the period.

Rappell observed: “The COVID-19 pandemic was a major event for financial markets around the world and while balances have recovered, we continue to see greater ups and downs in returns than prior to the pandemic.

“With the benefit of hindsight, it is fair to say that we didn’t expect the strength of the returns experienced since the depths of the pandemic.”

He said the possibility of double-digit returns for this financial year would likely please super fund members; however, he cautioned that volatility remains.

“We encourage members to focus on long-term outcomes when reviewing their retirement settings,” he added.