The best performing super funds this financial year

It’s been a rocky year for global markets as political uncertainty took hold, but experts are pleasantly surprised by the returns of super funds in 2017 and are urging business owners to shop around to make sure their retirement savings are on par with the best performers.

Superannuation research house SuperRatings has revealed the top performing funds using balanced investment options for the year ending May 31, highlighting that nine out of the 10 best performers come from the not-for-profit funds space.

HOSTPLUS’s ‘Balanced’ option topped the list of best performing funds, with a yearly return of 12.4%. In second place was First State Super’s ‘Growth’ option, which delivered a yearly return of 12.3%.

SuperRatings chief executive Adam Gee says the unlisted investments in not-for-profit funds really boosted returns in a year of bumpy returns for equities markets.

“For not-for-profit funds the liquidity requirements are generally a little less: There’s not as bigger drawn downs potentially in these funds and you tend to see a longer investment time frame,” Gee says. 

Because these super funds tend to have a younger member base, there is more scope to choose unlisted investments that might have less liquidity. Younger business owners would be wise to shop around and consider the not-for-profit models for their retirement savings, Gee says.

Up until the end of May, median balanced returns in accumulation funds over this financial year have been 10.3%. On a rolling 10-year basis, accumulation funds have returned 4.9%.

Global markets are credited with pushing funds forward, with the US and European share markets delivering near-record highs, which secured boosts this year even as the Australian market has experienced recent losses, predominantly from weak financial stocks.

Gee says overall he has been “very surprised” by the returns on offer.

“I think just the general strength of the returns is a surprise — a majority of super funds have weathered the storms quite well, given Brexit, the UK election, the Trump side of things this year,” he says. 

However, that makes it all the more important that SME owners saving for retirement take the time to review whether their own funds match up with the best performers.

“No doubt volatility will always be there, but overall global markets seem a little more on the positive side,” Gee says.

“From our perspective [considering super funds] is about looking at returns of your fund and making sure they’re in line with the industry averages.” 

While some SME owners are fans of self-managed super for the freedom it gives individuals to choose investments, SuperRatings chairman Jeff Bresnahan says mainstream funds could have the power to outperform DIY options in the year ahead.

“Mainstream funds have a much higher exposure to international shares, which have been performing well, while very few Aussie SMSFs have a reasonable exposure to international shares,” Bresnahan says.

Super savers with retail or industry funds also need to make sure they are maximising their use of contributions caps before they find themselves in the new super landscape after July 1, Gee says.

The top 10 performing Australian super funds, according to SuperRatings

Returns for this financial year to May 31, 2017 

1. HOSTPLUS – Balanced
Return: 12.4%

2. First State Super – Growth
Return: 12.3% 

3. Sunsuper for Life – Balanced
Return: 12.2%

4. Russell iQ Super Employer – Russell Balanced portfolio*
Return: 11.9%

5. AustralianSuper – Balanced
Return: 11.8%

6. VisionSuper – Balanced growth
Return: 11.8%

7. Cbus – Growth (Cbus MySuper)
Return: 11.7%

8. CareSuper – Balanced
Return: 11.6%

9. Equip MyFuture – Balanced Growth
Return: 11.6%

10. Telstra Super – Balanced
Growth: 11.5%

*For-profit fund

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