'All-growth' superannuation funds return nearly 10% in 10 months

Expert says superannuation funds are delivering healthy returns in FY24 despite share market volatility.

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Superannuation funds focused on growth investments are delivering the best returns for investors in FY24.

A new report from research, data, and analytics provider Chant West shows 'all growth' superannuation funds have returned 9.8% over the 10 months ending 30 April within the 2024 financial year (FY24).

All growth funds invest 96% to 100% of funds in growth assets such as ASX shares and international shares.

The next best performer is 'high-growth' superannuation funds, with 81% to 95% of monies invested in growth assets. They're sitting on returns of 8.4% in FY24 to 30 April.

Chant West says median 'growth' superannuation funds, which comprise 61% to 80% growth assets, have returned 6.9% over the first 10 months of FY24.

Balanced funds, which invest 41% to 60% of monies in growth assets, have earned 5.7% returns.

Conservative funds, with just 21% to 40% in growth assets, have delivered a more modest 4.2% return on investment.

Balanced and conservative funds have more exposure to defensive assets such as cash and bonds. They are popular with investors who are near retirement and, thus, more focused on capital preservation.

Younger workers tend to go for growth fund options because they have longer runways to retirement, and can therefore withstand more volatility and take on more risk for higher returns.

What factors are affecting superannuation returns?

Chant West Senior Investment Research Manager Mano Mohankumar says both shares and bonds fell in April as the likelihood of interest rate cuts by the US Federal Reserve in the first half of 2024 diminished.

Mohankumar said:

Over the month, Australian shares fell 2.9%. International shares slipped 3.2% and 3.3% in hedged and unhedged terms, respectively. Bonds too had a disappointing month as Australian and international bonds fell 2% and 1.7% respectively, as bond yields rose.

However, the big story is the healthy return over the financial year to date, despite all of the uncertainty around inflation and expectations of when the Fed will start cutting rates, not to mention ongoing geopolitical tensions.

Mohankumar said superannuation investors should "put short-term noise aside and focus on the long game".

He said:

Over the long term, super funds continue to meet their return and risk objectives and our estimate of 8% for FY24 puts super funds on pace for a 13th positive return out of 15 years.

If you're thinking of boosting your superannuation with extra funds before the end of the financial year, Vanguard Australia provides 5 tips on how to get more money into your super by 30 June.

As we recently covered, there were two changes to superannuation in the recent Federal Budget.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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