Super fund returns kick off 2025 in positive territory

Superannuation fund returns have kicked off 2025 in solidly positive territory, according to the latest analysis from Chant West.

The specialist superannuation research and ratings house said the median growth fund (61% to 80% growth assets) were up 2.2% in January after achieving a median result of 11.4% last financial year.

Commenting on the result, Chant West senior investment research manager, Mano Mohankumar said the January result had been driven by strong domestic and international share markets which, in aggregate, had accounted for about 55% of the typical growth option.

“In terms of international shares, Europe led the way in January with the US lagging most developed regions. Donald Trump officially took over as President for his second stint in mid-January and sentiment in the US continued to be buoyed by his ‘America First’ policy agenda,” Mohankumar said.

“However, his tariff threats shook markets at the end of the month. In late January, we also saw the US tech sector take a hit on the back of claims that Chinese start-up, DeepSeek, had trained its generative AI capability to produce results comparable to the market leaders at a fraction of the cost.

“Over the full month, developed international shares returned 3.4% and 2.7% in hedged and unhedged terms, respectively. Australian shares fared even better, surging 4.5% given its low weighting to AI-related companies and higher exposure to financials. The ongoing tariff threats weighed on emerging markets shares which underperformed developed markets with a return of 1%. Bond markets were relatively flat with Australian and international returning 0.2% and 0.4%, respectively.”

Mohankumar noted that looked at over the long term, superannuation fund performance remained above target.

“Since the introduction of compulsory super in July 1992, the median growth fund has returned 8% p.a. The annual CPI increase over the same period is 2.6%, giving a real return of 5.4% p.a. – well above the typical 3.5% target. Even looking at the past 20 years, which includes three major share market downturns – the GFC in 2007-2009, COVID-19 in 2020, and the high inflation and rising interest rates in 2022 – super funds have returned 7.2% p.a., which is still comfortably ahead of the typical objective.”