Australian growth super funds see best returns in seven years

Australian superannuation funds performed strongly in 2019, with growth funds seeing a median return of 14.7 per cent, according to superannuation research firm Chant West.

That median growth was the best return in a calendar year since 2013.

But experts warn against expecting this level of growth to continue in the long run.

UniSuper Balanced took the top gong in Chant West’s best performing growth funds, with a return of 18.4 per cent.

The weakest performing growth fund saw a 10.5 per cent return, almost 9 per cent above the inflation rate.

Growth fund returns in the past 10 years have averaged at 7.9 per cent per annum.

Chant West senior investment manager Mano Mohankumar called it a “tremendous run” but said it should be noted that growth funds were not built to deliver that level of returns in the long term.

A typical superannuation return is about 3.5 per cent above inflation per annum, equivalent to between 5.5 per cent and 6 per cent in the long term or lower given the low inflation environment, Mr Mohankumar said.

“So it would be a mistake to assume that the level of returns over the past decade will continue,” he said.

“At some stage they’re going to revert to more ‘normal’ levels, and there will be more challenging times ahead.”

A growth super fund is one that invests 61 to 80 per cent in higher risk growth assets, such as shares and property, with the aim of achieving higher returns in the long term. This also means losses can be higher in a bad market, compared with super funds with a lower level of risk.

The majority of Australians have a stake in growth super funds, according to Chant West.

Should I switch my super fund?

It could be worthwhile to not only monitor how your super performance is tracking, but also to find out how much you are paying in fees to your super provider.

A fund with lower fees could prevent your super balance from diminishing over time.

If you’re thinking of switching super funds, it’s best to speak to a professional financial advisor who can give you advice based on your personal situation.

You can also consider using RateCity’s comparison tool to look at what your superannuation options are.

Top 10 performing growth funds (12 months to December 2019)

Source: Chant West

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