(Australian Associated Press)
Australian superannuation funds have overcome 12 months riven with political and economic uncertainty to post an eighth consecutive year of growth.
Overall, median super fund growth was 10.7 per cent in 2016/17, according to research firm Chant West – the best returns since median growth of 12.8 per cent in 2013/14.
Overseas shares delivered the best returns, led by the US, while a 13.8 per cent return from Australian equities was also a strong contributor, Chant West director, Warren Chant said.
The gains came despite the potential fallout from the UK’s shock Brexit vote in late June, 2016, Donald Trump’s surprising election victory in November and persistent expectations of interest rate rises in the US.
“On the face of it, those concerns would have been enough to keep share market investors in particular very cautious,” Mr Chant said.
“But instead we’ve seen share markets reacting optimistically.”
The best performing funds were also exposed to other assets, including unlisted property, though listed Australian property and Australian bonds were among the worst performing assets in 2016/17, he said.
After the turmoil caused by the global financial crisis, super funds have now delivered on their average five-year return objectives for the past three years, Mr Chant said.
“The message is that over the longest period we can measure Australia’s major super funds have delivered for their members what they set out to do,” he said.
Industry funds outperformed retail funds in 2016/17, with their heavier investments in private equity, unlisted property and unlisted infrastructure performing well and providing some insulation from volatility in other asset classes.
Industry funds were also stronger over the long-term, with returns one per cent higher over the last 15 years.
“Over the longer term, the asset allocation policies of industry funds have served them very well,” Mr Chant said.
“Those allocations to unlisted assets do mean slightly higher investment costs, but those extra costs have been more than justified by the better performance and lower volatility.”
The top performing growth funds in 2016/17 were balanced options from Hostplus, AustralianSuper and Sunsuper.