Super returns ride post-election share market “buoyancy”

Chant West’s latest superannuation fund performance update has seen growth funds ride the wave of post-election US market euphoria, with median growth fund returns up by 2.5 per cent in November.

Based off of this data and recent market movements, the research firm has estimated that the median growth fund (61 to 80 per cent in growth assets) is set to return 11 per cent for the 2024 calendar year.

This would land growth funds their 12th positive result in the last 13 years, and suggest that they have delivered on their risk and return objectives across the long-term.

“Growth funds, on average, have 30% invested in international shares and 25% allocated to Australian shares. While not reaching the same heights, Australian shares have still delivered about 13%,” Chant West Senior Investment Research Manager, Mano Mohankumar, said.

“The other point to note is that all other asset classes, with the exception of unlisted property, have produced positive returns for the year so far. Given the strength of share markets over the year, super fund members in higher risk portfolios would have fared even better.

“This year’s growth fund result would follow the better-than-expected return for CY23 of 9.9%, making the modest loss of 4.6% in CY22 seem like a distant memory. More importantly, super funds continue to meet their long-term return and risk objectives.

“On the risk side, there have only been five negative years over the entire period, which translates to less than one year in every six. Again, funds have done better than their typical long-term risk objective which is one negative return in every five years, on average.”

Data from Chant West also indicated that since the introduction of compulsory super in 1992, the median growth fund has returned 7.9 per cent per annum at the same time as the annual CPI increase was 2.6 per cent over the same period. This shows real returns of 5.3 per cent p.a., sitting above the usual 3.5 per cent target.