Australian superannuation funds managed to defy the worst predictions associated with the COVID-19 pandemic with the median growth fund returning 3.7% in 2020, according to the latest data from Chant West.
In a result which Chant West described as “amazing” given the economic damage wrought by the pandemic, the company said it represented the ninth consecutive positive calendar year for superannuation return and the 11th in the past 12 years.
Commenting on the outcome, Chant West senior investment research manager, Mano Mohankumar said that in March last year the prospect of finishing 2020 up 3.7% would have been inconceivable.
“2020 highlighted the long-term nature of super and the importance of patience,” he said.
“Members who sat tight generally did OK. Sadly, there were many others who panicked when markets fell and switched their investments to cash or a more conservative option. Not only would they have crystallised their losses, but they would also have missed out on some or all of the subsequent rebound.
“And, of course, there were those who withdrew their money from super completely. That’s understandable to deal with temporary hardship, but they’ll now be faced with making up considerable lost ground.
“The other key message from the 2020 experience is the importance of diversification. Growth funds have their investments spread across a wide range of asset sectors, and that works to cushion the impact during periods of share market weakness, as we saw in February and March. At the same time, they still have a sizeable allocation to listed shares – about 54% on average – so they’re able to benefit when those markets perform well, as we saw from April to December.
“The better performing funds over the full year were generally those that had a higher allocation to international shares, particularly those with a ‘growth’ style bias. Holding bonds rather than cash would also have helped, as would a relatively low exposure to listed infrastructure and listed property.”
Chant West listed the top 10 performing growth funds as being Suncorp Multi-Manager Growth, Australian Ethical Super Balanced, Vision Super Balanced Growth, VicSuper Growth (MySuper) UniSuper Balanced, Aware Super Growth, IOOF MultiMix Balanced Growth, Prime Super MySuper and Equip Balanced Growth.