Catholic Super and Hostplus have tied for top spot in the SuperRatings league table of the best-performing MySuper funds in 2016, each delivering a net return of 10.1 per cent.
The $7 billion faith-based fund and $20 billion industry fund for hospitality workers were the only two entrants to achieve double-digit returns for their MySuper members in 2016.
MySuper products are the no-frills, low-cost options that employers can choose as a default super fund for their workers.
The final full-year results follow the release of December’s performance data, which had shown Hostplus in pole position to be the top-performing MySuper provider in 2016.
A tumultuous year
Catholic Super chief investment officer Garrie Lette told Investment Magazine the fund’s strong performance in 2016 was a reflection of sticking by a long-term strategy and not getting spooked when an external fund manager went through a period of underperformance.
“The best-performing manager this year had been struggling for the past couple of years,” Lette said. “It was a manager with a contrarian nature; therefore, it had exposure to cyclical recovery-type stocks, which came to fore [in 2016]. To our credit, we hung in there through the previous couple of years of disappointing results.”
Strong returns across the Australian equities portfolio were an important driver of returns in 2016, he said.
Catholic Super and Hostplus both excelled in a tumultuous year for investments. The median return from MySuper funds was 7.3 per cent, with some providers achieving annual returns of just 4 per cent.
After a lacklustre start to 2016 in investment markets, results did lift in the second half of the year.
“Political upsets were the dominating theme of 2016, and this year we will see whether these trends carry over [on] the European continent,” SuperRatings executive chairman Jeff Bresnahan said. “There will be no shortage of political events in 2017, and based on last year, we can expect continued bouts of heightened volatility. However, also as in 2016, we may be surprised at the resilience of super funds and their ability to perform in a range of market conditions.”
All top 10 spots in the SuperRatings league table for the best-performing MySuper funds in 2016 were taken out by not-for-profit industry funds.
Local shares, property best asset classes
Cbus Super ranked third, with an annual net return of 9.6 per cent, while CareSuper placed fourth with a net return of 9.4 per cent. Sunsuper came in fifth place with 8.9 per cent.
Rounding out the top 10 were EISS Super, Energy Super, Media Super, Equip and HESTA – all with returns in excess of 8 per cent.
The SuperRatings report showed that local shares and property were the best-performing asset classes in 2016, with emerging markets and global listed infrastructure portfolios also delivering double-digit returns.
A higher allocation to unlisted assets, including real estate and property, is often cited as one of the key drivers of the historical long-term outperformance of not-for-profit super funds over their retail rivals.
Indeed, CareSuper chief executive Julie Lander said unlisted assets contributed to the $11 billion industry fund’s success in 2016.
“In terms of asset classes, while there were no particularly dominant contributors, allocations to unlisted asset classes such as property, infrastructure and private equity were valuable, as well as the active approaches applied [at the fund],” Lander explained.
CareSuper also benefitted from both strategic positioning and active management in the debt-oriented parts of the portfolio, with a slant to credit and absolute return over traditional fixed income, she said.
A separate report, also released on Thursday, by SuperRatings’ rival ratings house Morningstar, showed boutique retail fund Maple-Brown Abbott was the top-performing balanced option Choice fund in 2016, with a net return of 10.0 per cent.
