Which super funds have outperformed during the Covid crash?

From
Kirby Rappell

Kirby Rappell

In a financial year that saw a bull market turn into a sharp selloff followed by a recovery, super funds were rocked by a level of volatility not seen since the financial crisis a decade ago.

As funds finalise their reporting for June 2020, the fallout from the Covid-19 crisis is clear, but far from the sea of red that members and commentators may have expected back in March. For members invested in any of the top 15 performing balanced options, the past year has netted a slim but positive return compared to the estimated median return of -1.2%.

According to data from leading research house SuperRatings, Suncorp was the top returning fund over the 12 months to the end of June, with the Suncorp Multi-Manager Growth Fund returning 3.8%. This was followed by BUSSQ and Australian Ethical Super, whose balanced options returned 2.5% and 2.4% respectively.

 

 

While it is important to acknowledge those funds that have outperformed during the Covid-19 pandemic to date, members should bear in mind that long-term performance is what really counts.

Over 10 years, the top performers are AustralianSuper, whose balanced option has returned 8.8% p.a., followed closely by UniSuper and Hostplus. Performance for the median balanced option continues to hold strong, returning an estimated 7.6% over the decade to 30 June 2020.

 

 

“Importantly, over the long term, returns remain very healthy,” said SuperRatings Executive Director Kirby Rappell. “Super is a long-term game, so members should avoid chasing short-term results and ensure they are invested in a quality fund with the right investment strategy that is well positioned to deliver for their needs over the course of their working life.”

Interestingly, only half of the top performing funds over 12 months were among the top performing funds over 10 years, highlighting the difficulty for investment strategies to perform well in differing market conditions over a longer term.

“It was pleasing to see 15 out of the 50 options in the SR50 Balanced Index generate a positive return in the 2019-20 financial year, which speaks to the quality of funds available to members,” said Mr Rappell.

“Managing risks while delivering a positive return in this environment has been a real challenge, and this is likely to continue through the rest of 2020.”

According to SuperRatings, given the success of super over the past 10 years in accumulating wealth, members will feel the bumps more when markets go down.

“Prior to Covid-19, we saw the industry average account balance rise over $100,000, compared to around $30,000 during the GFC,” said Mr Rappell.

“This means that, on an absolute basis, members will see their balance move around a lot more than they have previously. Funds have done an excellent job of both managing risk and educating their members on these issues, but more can be done in this space.”

QSuper delivered the best return to risk ratio of its peers over the 7 years to 30 June 2020. While CareSuper, Cbus, MTAA, VicSuper and AustralianSuper delivered a higher return over this period, they did so at a slightly higher level of risk.

 

 

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