Despite market volatility over the last six months, super funds are expected to finish the financial year in a strong position with the median growth fund returning around 9 per cent, according to research from Chant West.
According to the researcher, listed share markets, infrastructure and currency have contributed heavily to the strong return.
The super funds researched – which covers industry funds and retail funds – performed well in May with the median growth fund up 2.7 per cent over the month.
Chant West senior investment research manager Mano Mohankumar said a 9 per cent result would be “astonishing” in light of the market volatility in the past year.
“The FY25 experience highlights the importance of remaining patient and not getting distracted by short-term noise,” Mohankumar said.
US President Trump’s “Liberation Day” tariff announcements had unsettled share markets on 2 April, but the subsequent pause on tariffs on most countries soon after resulted in a strong share market rally that continued into June.
“However, we’ve seen some risk-off sentiment in recent days due to escalating tensions in the Middle East,” Mohankumar said.
According to Zenith Investment Partners, which owns Chant West, the many announcements from President Trump on tariffs and the ensuing market volatility severely decreased investor confidence.
Zenith senior investment consultant Calvin Richardson said Liberation Day added to the volatility and hinted at a potential trade war and serious economic disruption.
He said investors should be “wary” and that in today’s landscape, “disciplined analysis” was required to assess the market accurately and make smart investments.
“This heightened uncertainty makes expert guidance crucial for managing risk and identifying genuine investment opportunities,” Richardson said.
When the first bout of tariffs was announced by President Trump in February on Mexico, Canada and China, Chant West data showed a slight pullback with the median growth super fund down 0.9 per cent.
This was in response to concerns around the impact of the tariff announcements and general slightly weaker US economic data.
At the time, advisers reported a rise in clients voicing concerns about market volatility and the need to reassure their clients their portfolios were set up to either remain stable or take advantage of the changes.
The majority of advisers said they advised their clients to stick to their long term plans and not make knee jerk alterations to portfolios.
Over the longer term, Chant West reported that since the introduction of compulsory superannuation in 1992, the median growth fund has returned 8 per cent per annum. With an annual Consumer Price Index (CPI) of 2.7 per cent over the same period, the return is 5.3 per cent per annum, which exceeds the usual target of 3.5 per cent.
Despite three major downturns (the Global Financial Crisis in 2007-2009, the Covid-19 pandemic in 2020, and rising inflation and interest rates in 2022), super funds have still returned 7.1 per cent per annum over the past 20 years.
