The results are in – Australia’s super funds have delivered a “competitive outcome in uncertain times”, according to analysis from SuperRatings, which has run the ruler over 2022-23 returns.

A rebounding sharemarket has delivered Australia’s six best-performing funds double-digit returns in the past financial year, while the top 10 delivered an average return of 9.5 per cent.

That’s a sizeable turnaround from the 3.4 per cent loss reported a year ago as the sharemarket suffered with a COVID-19 hangover amid soaring inflation and the start of interest rate hikes.

“As we see funds offering members a range of investment options, it is worthwhile to note we are seeing different options perform well in different market conditions,” SuperRatings executive director Kirby Rappell said.

“However, members should remember that superannuation is a long-term investment, and most of these options are still relatively new in superannuation terms.

“While short-term trends may be topical, longer-term trends are our primary focus as we want to see which funds have performed well over the long term and their alignment with their members’ outcomes.”

Top balanced superannuation funds

Balanced funds – which have between 60 and 76 per cent of their portfolio invested in growth assets – had the majority of their gains over the second half of the past financial year.

The top performers were ESSSuper, with a 13.3 per cent return last financial year; Vision SS, which returned 11 per cent; and Brighter Super, which delivered 10.6 per cent to members.

Top funds over 10 years

Over the more consequential 10-year time horizon, Hostplus and AustralianSuper were the top performers last financial year, Super Ratings found.

Hostplus’s balanced option has returned 8.9 per cent over that time period, while AustralianSuper has delivered 8.6 per cent to its members.

UniSuper and Australian Retirement Trust are just behind at 8.4 per cent, followed by Cbus’s growth option at 8.3 per cent.

Mr Rappell said funds were reviewing and writing down their unlisted asset values at the end of the last financial year, which contributed to weaker annual performance of funds with “significant” exposure to these assets.

“However, over the long term, they have added value to member outcomes, with many of the top-performing options over 10 years having exposure to alternative assets,” he said.

“Superannuation continues to deliver for members over the long term with annual returns of 7.1 per cent since compulsory superannuation began in 1992.”

What to expect in 2024

SuperRatings is advising members to expect a volatile 2024 for super funds as sharemarkets struggle with high interest rates and expectations that economic growth will continue slowing.

During 2023, five out of 12 months saw funds record a negative performance, meaning members who are nearing retirement should factor in fluctuations as a key factor in their financial plans.

“Since the onset of the COVID-19 pandemic, managing volatility has really come back into focus for funds after almost a decade of steady gains,” Mr Rappell said.

“The sharp rise in inflation and global uncertainty has been a constant over the past couple of years and we expect this to persist.”

The top-performing fund on a volatility adjusted basis in financial year 2023 was CareSuper’s balanced option, which returned 7.5 per cent on a seven-year basis, SuperRatings said.

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