Australia’s multi-trillion superannuation industry ended the 2021 financial year with outstanding results for members.

Major funds delivered returns in excess of 20% in the 12 months to 30 June this year, while the overall returns for the median default fund (typically featuring a 60% – 80% allocation to growth stocks) were between 17.1 and 18 per cent, depending on methodology.

This strength follows on from relatively flat performance the prior year, and largely reflects the rapid recovery after the market slump in March and April 2020.

Retail super funds – which generate profits for shareholders, unlike their industry peers – enjoyed particularly strong returns as a result of their large exposure to equities.

“The better-performing funds over the year were generally those that had higher allocations to listed shares, and particularly to international shares,” Chant West, Investment Research Manager from Mano Mohankumar told The New Daily.

“Australian shares gained an impressive 28.5% while international shares surged 37.1% in hedged terms.” 

“The traditional defensive sectors such as bonds and cash were the weakest performers over the year, so funds with a relatively low allocation to those areas performed better.”

International incursion

The continued strength of Australia’s super sector has attracted a number of high-profile international financial institutions in recent years,, perhaps most notably Vanguard.

The US-based company has more than AUD$10 trillion in assets under management worldwide and is regarded as one of the pioneers of passively-managed exchange-traded funds (ETFs).

Since Vanguard entered the Australian market in 1996, the company has run money for local superannuation funds – with the country’s largest fund, AustralianSuper, investing more than $800 million through the business. 

But more recently Vanguard has sought to sever those ties as it prepares to launch its own assault on Australia’s world-leading pensions system.

Goldman Sachs are similarly investing into their superannuation capacity as part of their plan to offer family office services to high-net worth Australians.

Sources:

• Australian Government: Sound fundamentals: Australia now home to world’s 4th largest pension assets
• The New Daily: Superannuation returns are unusually high, so don’t expect that two years running
• The New Daily: Fresh rankings name top 10 performing super funds
• The Sydney Morning Herald: Vanguard hatches bold plan to crash the super party
• Vanguard: Why invest with Vanguard?
• The Australian: Goldman Sachs Targets wealthy family offices in fresh push