AMP super high growth option delivers 11.14%
Increasing exposure to private debt and diversified credit together with being overweight on US equities has helped AMP deliver a 11.14% return for members of its MySuper 1970s high growth superannuation fund option.
At the same time as industry superannuation funds have revealed another 12 months of positive returns, AMP pointed to what had driven returns across its Signature Super MySuper options.
The 1970s option is part of AMP’s Lifestage MySuper offering which currently uses a high growth asset allocation and is the firm’s largest by funds under management.
The AMP returns come against the background of industry funds REST and HESTA reporting returns ranging from 8.67% and 13% depending on allocations.
“A high allocation to global listed equities, together with positive active asset allocation and security selection from several of our underlying managers helped drive strong returns for members across the cohorts, with the funds benefitting from positioning for market themes like the strong surge in AI adoption across both the US and global markets,” the company said.
Commenting on the outcome, AMP chief investment officer, Anna Shelley noted that from December to June, the firm’s portfolios had a tactical overweight to US equities “which saw strong returns as our funds continued to outperform their benchmarks”.
“We have been increasing our exposure to private debt and diversified credit, which have delivered high and consistent returns, and our funds benefitted from a very strong stock selection in international equities as well as a low allocation to direct property, which is the only negative returning asset class this year.
“Sharemarket gains were once again led by the US tech sector. Capitalising on the universal appetite for AI adoption together with our high strategic allocation to global listed equities allowed us to record strong performance for our members,” Shelley said.
“The prospects for global equities are very strong over the long timeframe we consider for our members who will be invested for another 20+ years. AI-led productivity benefits should underpin GDP growth and corporate earnings for many years to come. This, combined with a decade or so of spending on clean energy infrastructure, results in a very positive outlook for equity and corporate debt markets.
“Looking ahead, short term market uncertainty in the lead up to the US elections may present an attractive buying opportunity, in which event we would look to take advantage of sharemarket weakness in delivering maximum returns for our members.
“Diversification remains key to our strategy in helping deliver sustainable investment returns over the long term. We will be implementing our annual strategic asset allocation review later in the year to ensure our portfolios can continue to help more Australians retire with confidence.”
I’d be willing to guess another reason retail funds are outperforming industry funds is a low or nil allocation to mis-priced unlisted assets. Something which will haunt industry funds for many years to come.
AMP and others, such as CFS, are like runners in a marathon claiming to be the ‘winners’ at the 5km mark.
A common denominator in ‘winners’ high growth results for last 1yr has been big bets on a handful of US techs, and esp. meta, MS and nvidia.
Don’t get me wrong, great outcomes for those young members in high-growth options, but interestingly not hearing much about the results in life stage options for the older members on cusp of retirement.
As the adage goes, one swallow doesn’t make for a summer. So let’s wait and see if this is a flash in the pan or actually the start of better performance from these funds.