Australian superannuation funds delivered a second year of above 9% median returns in FY24.
While this is impressive, Chant West senior investment research manager Mano Mohankumar says it's the longer-term investment performance of superannuation funds that really matters.
Let's investigate.
What is the median long-term return of superannuation funds?
A median growth superannuation fund has a 61% to 80% allocation to growth investment assets like international and ASX shares.
Chant West data shows the 10-year median return per year for median growth funds is 7.2%.
The typical long-term target return of superannuation median growth funds is approximately 3.5% plus inflation, which equates to about 6% per annum.
The Australian Government introduced compulsory superannuation in 1992.
Since then, Mohankumar said the long-term performance of median superannuation growth funds had remained above the long-term target return.
He commented:
Since the introduction of compulsory super, the annualised return is 7.9% and the annual CPI increase is 2.7%, giving a real return of 5.2% [per annum] – well above that 3.5% target.
Even looking at the past 20 years, which includes three major share market downturns – the GFC in 2007-2009, COVID-19 in 2020 and the high inflation and rising interest rates in 2022 – super funds have returned 7.2% [per annum], which is still comfortably ahead of the typical objective.
What about the median returns of other types of funds?
The highest level of superannuation growth fund is called an 'all growth' fund, which allocates 96% to 100% of superannuation monies to growth assets.
The long-term target return is 4.25% plus inflation. The 10-year median currently sits at 9.1%.
At the other end of the superannuation strategy scale are conservative funds. They allocate only 21% to 40% to growth assets and put the rest into defensive assets like cash and bonds.
The long-term target return of conservative funds is 1.5% plus inflation. The decade-median is 4.3%.
Conservative funds are popular with Australians nearing retirement. At this stage of their investment journey, they tend to be risk-averse and prefer to prioritise the preservation of their lifetime savings.
Top 10 median growth superannuation funds over 10 years
Chant West has published a list of the top 10 median growth superannuation funds based on median annual returns over the past 10 years. This list incorporates the results for FY24.
As stated earlier, the typical long-term target return of median superannuation growth funds is about 6% per annum. The 10-year median currently sits at 7.2%, and all of the top 10 funds did better than that.
Note: Performance is shown net of investment fees and tax but before administration fees.
| Rank | Superannuation fund name | Median annual return over 10 years |
| 1 | Hostplus Balanced | 8.3% |
| 2 | Australian Retirement Trust – Super Savings Balanced | 8.1% |
| 3 | AustralianSuper – Balanced | 8.1% |
| 4 | UniSuper Balanced | 7.9% |
| 5 | Cbus Growth (MySuper) | 7.7% |
| 6 | Vision Super Balanced Growth | 7.6% |
| 7 | HESTA Balanced Growth | 7.6% |
| 8 | CareSuper Balanced | 7.6% |
| 9 | Spirit Super Balanced | 7.5% |
| 10 | Aware Super Balanced | 7.5% |
