Infrastructure key to industry funds out-performance, says ISN

The industry super fund sector’s out-performance is due not only to its low fees and lack of commissions but also to its investment in infrastructure, according to the Industry Super Network (ISN).

ISN has pointed to SuperRatings’ latest data as proof of industry funds out-performance on every time metric.

ISN chief executive David Whiteley said the recent acquisition of 99-year leases on Port Kembla and Port Botany were examples of investments super funds members could normally not get access to.

“Super is a 40-year investment and the data continues to demonstrate that the industry super sector, on average, delivers superior net returns to their members over the medium to long term,” he said.

SuperRatings found industry funds outperformed by 0.32 per cent over one year, 1.30 per cent over three years, 0.67 per cent over five years, 1.48 per cent over seven years and 1.88 per cent over 10 years.

Although the median balanced fund fell by -0.2 per cent during March, SuperRatings said yearly growth was still strong at 12.5 per cent at the end of March. 

Super funds also recorded positive quarterly returns, with three consecutive quarters of solid performance leading to the first instance of double-digit returns since 2007, SuperRatings said. 

Since the global financial crisis (GFC), super funds have recorded 43.9 per cent growth and are now 7.9 per cent above their pre-GFC peak. 

Chant West said the median growth fund was 8 per cent above its pre-GFC levels. 

“Members should be pleased to hear that, with only 10 weeks of the financial year remaining, funds are on track to deliver a third consecutive positive financial year return – quite likely in double digits – and the highest since the pre-GFC period,” it said. 

SuperRatings said Australian equities were the largest driver of returns in March, which were hit by the Cypriot banking crisis, with the S&P/ASX 200 Accumulation Index falling -2.2 per cent. Super funds came out slightly better, with the SR50 Australian Shares Index falling -1.7 per cent. 

Global factors would continue to negatively affect equity performance, according to SuperRatings. It cited the Boston Massacre, poor economic data from China and falling commodity prices. It said a well-diversified portfolio had sheltered super funds from the majority of the fallout, with -0.3 per cent estimated returns in April so far. 

Shares and listed property were the stand-out performers in March, according to Chant West. Despite the slight downturn, Australian shares grew 8 per cent over the quarter and international shares 9.8 per cent in hedged terms, while Australian and global REITS were up 5.3 per cent and 8.8 per cent respectively.