After averaging 12.7% per annum over the three previous years, super funds delivered a fourth consecutive calendar return in 2015 with the median growth fund returning a more modest but respectable 5.8%. The top-performing fund for the year was MTAA, which returned 9.5%. Even the worst-performing fund in the growth category produced a positive return of 1.8% which is still slightly ahead of inflation for the year. Growth funds are those that have 61 to 80% of their investments in growth assets and are the ones in which the majority of Australians are invested.
Key highlights include:
- While the 2015 return of 5.8% is lower than the previous three years (12.8% in 2012, 17.2% in 2013 and 8.5% in 2014), members shouldn’t be disappointed with the result. The typical longer-term return objective for these funds is to beat inflation by 3% to 4% per annum, and with the inflation figure likely to come in well under 2% for the year they’ve pretty much hit that target.
- The better performing funds were generally those that maintained a relatively high exposure to foreign currency (because of the decline in value of the Australian dollar), Australian listed property, unlisted property, unlisted infrastructure and private equity, and a lower exposure to Australian shares, hedged international shares, the broader bond market, hedge funds and cash.
- Long-term return and risk objectives have been achieved. When we look back over the 23½ years since the introduction of compulsory super, growth funds have returned 8% per annum on average, outperforming inflation by 5.4% per annum.
- Industry funds outperformed retail funds over the year, returning 6.7% versus 5.2%.
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