Australia’s major super funds weathered a late Brexit scare to post their seventh consecutive positive financial year return. The median growth fund returned 3% in 2015/16, while the top-performing fund –QSuper – delivered 7.6%. All funds in the Growth category posted positive returns 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 this year’s return is significantly lower than the previous three years (15.6% in 2012/13, 12.8% in 2013/14 and 9.8% in 2014/15), members shouldn’t be too disappointed with the result given that super funds are faced with a very uncertain global political and economic environment.
- 2015/16 was a great example of the benefits of diversification at play. Of the main asset sectors, Australian shares only just made it into positive territory and global shares lost ground, but despite that the median growth fund still produced a return of 3%. That’s because these funds are so well diversified across a wide range of growth and defensive asset sectors, including alternative and unlisted assets, they can successfully smooth out returns when listed share markets are struggling.
- The better performing funds were generally those that had higher allocations to unlisted assets and Australian listed property and a lower exposure to shares. Those that maintained a higher proportion of their defensive assets in bonds rather than cash would also have benefited, as would those more exposed to foreign currency.
Industry funds outperformed retail funds over the year, returning 4.3% versus 1.9%.
