Australians with superannuation funds investing in international shares and Australian listed property have come out on top in 2015.
SuperRatings has released its annual list of the top 10 performing super funds, with major super funds delivering an average 5.6% calendar year return in 2015.
Although this is well below the returns of 2013 (16.3%) and 2014 ( 8.1%), the average return has been deemed “solid” given the volatile market conditions.
Taking out top spot was MTAA Super with a strong 9.5% return, 1% higher than second placed BUSSQ, which returned 8.6% to investors.
MTAA super chairman John Brumby said in a statement while the outcome is excellent, it is important to remember superannuation is a long-term investment.
“While 2015 was an outstanding year it would be unrealistic to expect a repeat of these results every year, particularly when we are experiencing very challenging market conditions,’’ he said.
“Perhaps more pleasing is that the My AutoSuper product is now ranked in the top quartile for performance over a three year period.”
Every superannuation fund in the 2015 top 10 is a not-for-profit fund.
SuperRatings chief executive Adam Gee told SmartCompany the main reason for NFP funds dominate is the diversification of their investments.
He says that top performer MTAA has been “a real turnaround story”, going from the top performing fund prior to the Global Financial Crisis, to suffering major losses of $1.93 billion before regaining good returns.
“MTAA has had a fantastic year they made a reasonable profit… I think the thing that stands out is the NFP industry fund sector which has been very strong in comparison to the retail sector,” Gee says.
The median international shares option increased by 8.8% in 2015, which was boosted by a 10.9% fall in the Australian currency against the US dollar. The ASX200 Accumulation Index experienced modest growth of 2.6%.
The best performing asset class was the Australian Listed Property, which rose by 14.4% for the year. Returns on cash remained low, with the median cash option increasing by 2%, while fixed interest returns provided a median 1.6% return for the year.
Gee says SMEs should take the long view on super returns.
“Our view is very much we don’t pay a lot of attention to one-year returns, the preference is really to have a look at long -term returns – the seven, 10 year options,” he says.
“Whilst the one-year numbers are interesting, we wouldn’t suggest members use those numbers to change the fund.”
Instead, Gee says individuals should undertake a broader assessment that incorporates long-term investment returns, fees, and insurance.