Super funds aim to break 24-year record

Growth super funds (as defined by 61% to 80% in growth assets) are set to achieve the highest end of financial year return in 24 years, according to data from Chant West. 

The median growth fund returned 1.1% in May, with a 15.7% return for the first 11 months of the financial year. 

With markets up in June, it was expected the end financial year cumulative return would finish at around 17.5% 

Mano Mohankumar, Chant West senior investment research manager, said that super fund members who held their nerve and remained patient through the COVID-19 crisis were rewarded with one of the strongest years in the compulsory super era. 

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“Should growth funds finish the year at or around the current level, it would represent the highest annual return in 24 years,” Mohankumar said. 

“The last time we saw a higher annual result was all the way back in 1996/97 when growth funds returned 19.4%.” 

Mohankumar said the past two financial years illustrated the strength and resilience of the leading super funds. 

“Despite the massive hit that COVID-19 delivered to financial markets last year, the diversification built into growth funds enabled them to limit the damage, and the small loss of 0.6% for FY20 was far better than expected,” Mohankumar said. 

“And this year, with a little over 50% allocated to listed shares, these funds have been able to capture a meaningful proportion of the upside as markets staged their remarkable recovery.  

“The cumulative return since the COVID-19 low point at end-March last year is now about 25%, which is amazing given the chaos the world was thrown into by COVID-19. 

“We’re now sitting about 10% above the pre-COVID crisis high that was reached at the end of January 2020.” 

Traditional diversified fund performance to 31 May 2021 

Source: Chant West