Two super funds tied for the top spot for FY19 performance, with both Chant West and SuperRatings finding that UniSuper and QSuper returned close to 10 per cent for the year, while the industry in general delivered a record-breaking tenth straight positive year.
The positive returns – Chant West found that the median growth fund returned seven per cent to 30 June while SuperRatings said that the median capital stable option delivered 5.3 per cent – were above what most experts predicted a year ago and significantly above what they looked to be after the December market slump.
Further, they were well above the typical long-term objective of funds to beat inflation by 3.5 per cent, with the median growth option outstripping the current rate of inflation by around 5.5 per cent.
According to Chant West senior investment manager, Mano Mohankumar, UniSuper’s strong performance came off the back of its preference for listed assets, which different to the unlisted bias of most other not-for-profit funds.
“It prefers to gain its exposure to property and infrastructure by taking large stakes in high quality listed companies,” he said. “UniSuper believes that taking this listed market route has enabled it to be opportunistic in building a portfolio of higher quality property and infrastructure assets at attractive prices.”
QSuper, in contrast, had a meaningful allocation to unlisted assets such as property, infrastructure and private equity, with returns then uniquely further smoothed out, Mohankumar said, by investing significantly less in listed shares than other funds.
“Against that, it maintains a significant allocation to long duration bonds which carry share market-like risk but are a better diversifier against share market falls than traditional bonds,” he added.
Data from SuperRatings shows that both funds were also amongst the top returning funds for the 10 years to 30 June, returning 9.6 and 9.3 per cent for their balanced options respectively, which narrowly trailed the balanced sector’s leader over the last decade, AustralianSuper with 9.8 per cent.
QSuper’s balanced option also delivered the best risk/return ratio over the last seven financial years, as the table below shows. While its returns were slightly below the 10.1 per cent average across the top 10 ranking funds over that period, according to SuperRatings, its returns were best given the level of risk involved.
Top 10 funds ranked by risk and return (over 7 years)
Return % pa
QSuper - Balanced
CareSuper - Balanced
Hostplus - Balanced
Cbus - Growth (Cbus MySuper)
BUSSQ Premium Choice - Balanced Growth
Sunsuper for Life - Balanced
Catholic Super - Balanced (MySuper)
CSC PSSap - MySuper Balanced
HESTA - Core Pool
Media Super - Balanced