Super funds enjoy strong financial year

The 2017/18 financial year was another great one for super funds, with the median growth fund returning 9.2 per cent for the year in a ninth consecutive positive year, Chant West has found.

Hostplus was the best performing growth fund, which Chant West defined as having a 61-80 per cent allocation to growth assets, for the fiscal year for the second time running, delivering 12.5 per cent. All growth funds easily bettered the rate of inflation, with even the lowest performer returning 12.5 per cent.

Chant West found that all risk categories of funds met their typical long-term return objectives at the end of the fiscal year, which range from CPI + two per cent for conservative funds to CPI + 4.75 per cent for all growth offerings.

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Chant West senior investment research manager, Mano Mohankumar, reminded fund members that considering performance against long-term objectives was still important regardless of strong performance for FY2018.

Mohankumar also said that while Australian shares had had a strong year, gaining 13.2 per cent, the better funds for the financial year had more diversified investments.

“Share markets have been remarkably resilient despite fears about a potential US-China trade war, political tension between North Korea and the US and continuing uncertainty about the pace and timing of interest rate increases,” Mohankumar said.

“While shares are still the main drivers of performance, major super funds are well diversified across a wide range of other sectors including unlisted assets. The better performing funds in 2017/18 were those that had higher allocations to listed shares and to unlisted assets – property, infrastructure and private equity. A lower exposure to traditional bonds and cash also greatly helped, given they were the worst performing sectors.

Finally, industry funds again outperformed retail funds last financial year, meaning that their superior returns remain intact over the time periods measured by Chant West over the last 15 years.