Australia’s multi-trillion dollar superannuation system increased significantly in the past financial year, off the back of a roaring bull market that quickly recouped March 2020’s COVID losses.

Not every sector of the market saw the benefit of that bullish trend however, leaving some investors behind.

The average balanced super fund – which typically invests 70% of its capital in shares or property – returned 20% in the 12 months ending 30 June, marking the best performance these funds have delivered in decades.

The median growth fund (85% invested in shares or property), meanwhile, delivered 18% – with the best performing fund in this category notching up a return of 21.6% and the poorest performer a still-respectable 13%.

Merricks Capital Investor Relations Manager Fiona Clark told the ABC the results were “something to celebrate”. 

“Even when you take into account the fact we did have a bit of a wobble early last year, the median fund at this stage was 10% higher than where it was at the beginning of the COVID pandemic,” she said.

“We definitely have seen some strong performance from the superannuation funds this year.”

Ms Clark however noted self-managed super funds, who don’t often have the same access to deals and investments as the larger retail and industry funds, may not have achieved the same performance.

The best performing ASX sectors in 2021 financial year

Almost every sector finished the 2021 financial year in the green, with the major exception being Utilities – these companies finished the year 22.94% below where they started. 

Even so, there was a sizable difference between the second worst performer (healthcare, up 4.98%) and the top end of the results.

So who led the pack in FY20?

Financials (ASX: XXJ)

In third place were the financial names (excluding Australian real estate investment trusts), which put on 35.69% by the end of the financial year.

The banks in particular enjoyed a better-than-expected start to the calendar year, with fears over mortgage and business defaults easing.

Even so, record low interest rates are taking their toll and net interest margins have fallen back 6 basis points in the last six months and are expected to remain a challenge for the banks. 

Information technology (ASX: XIJ)

While not the best performing sector over the year, Information Technology companies were certainly a close second.

The sector lifted 38.88% last financial year, bolstered by the sudden flight of consumers away from physical spaces and onto digital platforms as a pandemic raged just beyond their doors.

Investors expect growth in this market to continue at an accelerated pace, but caution the returns will be less predictable than those achieved in the prior year.

Consumer discretionary (ASX: XDJ)

Taking out the number one spot was the Consumer Discretionary sector, which lifted 42.62% during the previous financial year.

This sector benefited from heightened consumer spending following generous government support packages and early superannuation access schemes.

Deloitte expects consumer spending in the last financial year was at its highest in more than a decade, but warned after such significant spending last year that rate will decline significantly in the coming 12 months.

Any advice contained within this article is general advice and does not consider your personal circumstance, you should consider whether it’s appropriate for you. The information we are giving you is for educational purposes only. “Investing is about understanding your risk” and every time you invest in the share market there is a risk of loss. Past performance is not a reliable indicator of future performance.

Sources:

• Tveeder: News Breakfast 20 July 2021
• EY: Australian major banks’ half year results 2021: Staying the course
• Money Smart: Super investment options
• The New Daily: Superannuation funds achieve returns we haven’t seen in decades
• The Motley Fool: Best and worst performing ASX sectors of financial year 2021
• Market Watch: Tech stocks surged along with COVID-19. Don’t expect the same in 2021
• The Sydney Morning Herald: Shares end financial year with best returns in decades
• Deloitte: Deloitte Access Economics Retail Forecasts: a consumer-led recovery