“Performance over the last 12 months has been a welcome result for our members and follows a multi-year program of reorienting the portfolio towards areas of competitive advantage,” he said.
“Our shorter term performance is explained by our positioning in equities and bonds, however our dedicated investment team remains firmly focussed on delivering longer-term investment outcomes to members.”
SuperRatings executive director Kirby Rappell said funds with higher equities exposure generally outperformed those with more unlisted property this year, and members invested in index funds did especially well.
“We observed funds reviewing and writing down their unlisted asset valuations at the end of the financial year, contributing to the moderately weaker annual performance of funds with significant exposure to these assets in FY23,” Mr Rappell said.
HESTA’s indexed growth fund was the top-performing passive balanced option for the year, with returns of 12.5 per cent, followed by Rest and Hostplus’ offerings, which delivered 12.4 per cent and 12.3 per cent respectively.
But super fund members needed to focus on long-term performance, Mr Rappell added, which benefited from heavy unlisted asset exposures.
The biggest industry super funds, which typically invest 30 per cent to 40 per cent of their portfolios in unlisted assets, dominated for 10-year returns in their balanced options. Hostplus had the best performance with 8.9 per cent, followed by AustralianSuper (8.9 per cent), ART and UniSuper (both 8.4 per cent), and Cbus (8.3 per cent).
Looking at the growing field of sustainable funds, upstart Raiz Super’s “emerald” socially responsible fund was the top-performing balanced option for the financial year with returns of 13.3 per cent, according to SuperRatings.
Super SA’s sustainable balanced option followed with 12.1 per cent. Industry heavyweights UniSuper and Aware Super’s ethical funds also performed well with returns of 11 per cent and 10.9 per cent respectively.
But Mr Rappell said investors should remember that super was a long-term investment and most ethical options were “still relatively new in superannuation terms”.
He said members should also brace for more ups and downs in their super funds’ returns next financial year, mirroring warnings by superannuation executives earlier this month.
“Since the onset of the COVID-19 pandemic, managing volatility has really come back into focus for funds after almost a decade of steady gains,” he said.
“The sharp rise in inflation and global uncertainty has been a constant over the past couple of years, and we expect this to persist.”
Analysing seven-year returns in balanced options when adjusted for volatility, CareSuper had the most reliable option, according to SuperRatings. It delivered 7.5 per cent for the period.
