Sam Sicilia, Hostplus CIO

Despite a relatively subdued return this year, the Hostplus Balanced investment option still leads the pack when it comes to 10-year returns among growth-tilted funds, according to analysis by research houses SuperRatings and Chant West.  

While the flurry of financial-year performance announcements inevitably creates some short-term noise, SuperRatings executive director Kirby Rappell stressed the importance of the industry promoting a long-term mindset among fund members. 

The Hostplus Balanced option topped SuperRatings’ SR50 Balanced Index by delivering 8.3 per cent return per annum in the decade to 30 June 2024, followed by the balanced options of Australian Retirement Trust and AustralianSuper. The index tracks options with a 60 to 76 per cent growth asset allocation.  

This is despite Hostplus Balanced option’s 7.6 per cent FY24 return, which is on the lower end compared to some of its big fund peers.  

SuperRatings top 10 Balanced options over 10 years to 30 June 2024 

Rank  Option Name  1 Year %  10 Year % p.a. 
1  Hostplus – Balanced  7.6  8.3 
2  Australian Retirement Trust – Super Savings – Balanced  9.9  8.1 
3  AustralianSuper – Balanced  8.5  8.1 
4  UniSuper – Balanced  9.2  7.9 
5  Cbus – Growth (MySuper)  8.4  7.7 
6  Hostplus – Indexed Balanced  12.2  7.7 
7  Vision Super – Balanced Growth  8.4  7.6 
8  HESTA – Balanced Growth  9.1  7.6 
9  CareSuper – Balanced  8.5  7.6 
10  Spirit Super – Balanced (MySuper)  8.8  7.5 
   SR50 Balanced (60-76) Index^  8.8  7.0 

^ indicates interim result. Returns are after investment fees and taxes and are rounded to one decimal place; however, rankings are determined using unrounded data held by SuperRatings.

Chant West similarly tracks a category called “growth funds”, which is defined as a 61 to 80 per cent allocation to growth assets. The same three Hostplus, ART and AustralianSuper options also topped the 10-year ranking there.  

The top three performing “growth funds” in FY24, according to Chant West, are Mine Super Growth, CFS FirstChoice Growth, and IOOF Balanced Investor Trust (10.7 per cent).  

Global equities have been the standout performer among all asset classes during the year, with both Rappell and Chant West senior investment research manager Mano Mohankumar saying the strength of the listed market is surprising.  

Mohankumar said the Chant West is still finalising unlisted asset class returns for the period ,but the only asset class that finished in the red, unlisted real estate, is likely to produce losses “in the high single digits on average”. 

State of the industry 

Rappell said over the past decade, the returns of super funds have converged into an increasingly narrow range, due to the impact of the YFYS performance test and the spotlight it has shone on the industry. 

“There are less usually positive and usually negative outliers and a lot more grouping. Funds look probably more similar than they used to and on average,” Rappell told Investment Magazine.  

“It also means that there’s less latitude in this era for funds to do things completely different.” 

It’s a good thing for consumers, as they now have more certainty that they are with a reasonably performing fund, Rappell said, but there are different considerations at an industry level.  

“You want to see a vibrant super industry that has appropriate levels of innovation and struggles of competition to continue to drive it forwards over the next 5, 10,15, and 20 years,” he said. 

“The key challenge you have at the moment is the level of peer awareness is as high as it’s ever been, and the risk of looking different is higher than it’s really ever been. 

“[It] doesn’t make innovations easier.” 

The rapid speed of consolidation funds of the past couple of years has seemingly slowed down this year. Part of the reason is that many funds are still digesting existing merger deals, such as the combining of Spirit Super and CareSuper, Vision Super and Active Super, and Mine Super and TWUSUPER. All three mergers are expected to be completed by the end of 2024.  

But with past hints from prudential regulator APRA that it thinks funds need to be at least $30 billion in size to be sustainable, the pressure remains on smaller funds to chase meaningful scale. The $9 billion Qantas Super this week said it will merge with ART, and the $25 billion TelstraSuper is still looking for a partner.  

“A really important point for the industry now is [finding out] what is the long-term number of funds that is sustainable, that is worthwhile,” Rappell said. 

“Because not all of the top performers are funds of a specific size or a specific type, I think that’s really good for the industry.” 

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