The median growth super fund has delivered returns of 18% in the last financial year, the best returns in 24 years, according to Chant West.
This was the second-best performance since the introduction of compulsory superannuation, beaten only by returns of 19.4% in 1996/97.
To get this performance a year ago would have been “inconceivable”, the firm said, given the financial disruption caused by the COVID-19 pandemic.
All Growth super funds returned 26.7% while, at the other end of the spectrum, investors in conservative super fund saw returns of 7.9%.
The top-performing fund was Mine Super Growth which returned 22.6% followed by CFS FirstChoice Growth which returned 21.7%. Chant West said funds which did well tended to be those which had higher allocations to international shares and low allocations to bonds and cash.
“An 18% return would have been inconceivable a year ago and represents a welcome reward for fund members who held their nerve and remained patient through the depths of the COVID-induced market crisis,” Mano Mohankumar, Chant West senior investment research manager, said.
“The experience over the past two years highlights the resilience and robustness of super funds’ portfolios. Despite the battering that share markets took over February and March 2020, the diversification built into growth funds enabled them to limit the damage to a small loss of 0.6% for FY20 which was a much better result than expected.
“And in FY21, with over 50% allocated to listed shares, these funds were able to capture a meaningful proportion of the upside as markets staged a strong and sustained rally. In fact, growth funds finished FY21 more than 10% above the pre-COVID crisis high that was reached at the end of January 2020.”
However, he stressed that returns of this level should not be thought of as ‘normal’ as super funds tended to achieve returns of 5.5% to 6% per annum over the long term. Over 20 years, which included three market downturns, super funds had returned 6.9% per annum.
Over a rolling 10-year period to June 2021, the median growth fund had exceeded its return objective apart from a period during the Global Financial Crisis in mid-2008 and again in 2017.