What are the average returns for balanced superannuation funds?

Chances are your super is invested in a 'balanced' fund.

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Almost all of us have a superannuation fund. After all, in Australia almost all workers must have 11.5% of their paycheques diverted into a super account, quarantined for our retirements.

Most Australians who don't have a self-managed super fund (SMSF) will probably find that their super is going into something known as a 'balanced' fund.

Super providers offer a range of different investment options for our super, graded by the risk and reward spectrum. You can opt to have your cash invested in purely growth assets like ASX shares, or else conservative options like cash and government bonds.

Most super providers offer a happy medium though – the balanced fund. This option aims to balance the aim of achieving the best returns on investment possible with the desire of most Australians to limit volatility within their super funds.

As such, your typical balanced fund will invest your money in a range of assets, including aggressive and conservative investments. This means a balanced fund will normally have a mix of ASX shares, international shares, bonds, and cash, amongst other assets within its portfolio.

But how much does your typical balanced super fund return to you each year? That's what we'll be diving into today.

Thanks to some analysis by superannuation research firm Chant West, we have a pretty good idea.

What is the average return of a 'balanced' superannuation fund?

According to Chant West, the average Australian balanced fund (41%-60% of growth assets) returned 9.4% over the 12 months to 31 May 2024.

The average return over the three years to 31 May was 5.3% per annum. That grew to 6.7% per annum over five years and 7.2% over ten.

The numbers do show though, that choosing a balanced fund and chasing a less volatile portfolio does have a cost. The same data shows that an 'all-growth' fund delivered a 13.7% return over the 12 months to 31 May. This fund type also delivered an average of 6.9% per annum over three years, 8.8% over five, and 8.7% over ten.

That extra point or two can make a big difference over a working lifetime.

In contrast, your typical conservative super fund returned just 5% over the year to 31 May and averaged 4.3% per annum over the prior ten years.

Deciding on the type of super fund to go with should be a decision you and your financial advisor make, taking into account your individual circumstances. For example, if you are only a few years away from retirement, it is generally wise to take a conservative approach.

But even so, this data makes for some interesting reading.

Motley Fool contributor Sebastian Bowen 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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