US equities shine as unlisted weigh on super returns

In a year in which listed equities exposures have paid dividends for superannuation funds, another major retail funds player, Colonial First State (CFS), has reported double-digit returns.

A day after AMP Limited reported achieving 11.14% from its high growth MySuper option, CFS said it had delivered 12.1% from its balanced fund option, and 14.3% from its growth fund.

The company emphasised that it was the second consecutive year that it had delivered double-digit returns.

The FirstChoice Employer Super balanced fund (MySuper Lifestage 1965-69) delivered a 12.1% return, while the FirstChoice Employer Super growth fund (MySuper Lifestage 1975-79) delivered a 14.3% return.

The common denominator for AMP and CFS has been the exposure to global equities, particularly US tech stocks.

Their performance has been contrasted to that of Australia’s largest industry superannuation fund, AustralianSuper, which delivered just 8.5% on the back of a limited exposure to US equities.

As well, big construction industry fund, Cbus reported its Growth (MySuper) option achieved 8.35% with the fund defending its exposure to unlisted infrastructure and property which it said “remained a key source of outperformance over the long-term”.

TelstraSuper announced that its MySuper Growth option earned 9.6%.

Elsewhere, other industry funds have reported more solid returns, including 9.1% for HESTA and 11.3% for Australian Retirement Trust.

CFS chief investment officer, Jonathan Armitage said the strength of global share markets had really been the core driver of investment returns over the last 12 months.

“CFS is also in the relatively unique position of holding no legacy unlisted assets. In an environment of higher interest rates, this has allowed us to deliver another year of solid returns for members,” he said.

“Looking ahead, we continue to believe that inflation data will be volatile, keeping interest rates higher for longer and creating continued headwinds for some sectors such as commercial real estate,” Armitage said.

CFS Superannuation chief executive, Kelly Power said the firm was pleased to deliver strong returns for its members, emphasising it was the second successive year of double-digit returns.

“CFS continues to gain momentum as a leader in the Australian superannuation market by delivering strong returns for our customers, market-leading investment choice and annual fees that are 15 per cent lower than the average MySuper fund.”