Colonial First State has seen three consecutive years of double-digit calendar year returns across its MySuper balanced fund and growth fund, with CIO Jonathan Armitage saying that a pivot to emerging markets powered the fund higher in 2024.  
 
“One of the surprises has been the performance of markets like China,” Armitage tells Investment Magazine. “You continue to see robust returns from domestic equities as well. There’s also been strong performance out of areas like private credit, and some of the more recent exposures into insurance-related investments.”  
 
Colonial First State allocated to the asset class in early 2025 through MLC Asset Management, with Armitage saying their strong and highly uncorrelated returns made them attractive.  
 
“We believe that the sheer number of natural hazards that you’re seeing for a variety of different reasons mean that the demand for capital will continue to be robust and that it’s a very sensible way of diversifying our members.”  
 
Still, Armitage repeated his warning that members shouldn’t get comfortable with the returns super funds have been able to generate through much of the 2020s.  
 
“If you look over the last quarter of a century the average return for a super fund has been between 6-8 per cent. And it would be pretty sensible to expect that returns will move back towards those longer-term averages.”  
 
And while he cautioned against thinking about incidents like the arrest of Venezuelan president Nicolas Maduro as being part of a structural trend, Armitage said it was “very clear” that the current US administration is taking a different view on some of its historic alliances.  
 
“Some of those issues will not be particularly market impactful – but there will be some others that have greater implications. And you’re starting to see markets also focus, in the early part of this year, on budget deficits and the lack of concrete proposals from a number of developed economies about how they’re going to tackle those deficits as they continue to expand. You’re seeing that in Europe and you’re seeing that in the US.” 
 
“The President has been quite active in terms of a number of statements and remarks, one of which was to significantly increase military spending in the US. You’ve seen quite a sizeable move in the US 10-year already, and I think that shows markets are starting to return attention to some of those structural issues.”  
 
And while investors and commentators are sweating over who will be the next chair of the Federal Reserve, Armitage said that the composition of the whole board is probably more important for market behaviour.  
 
“The Fed chair is but one voter on the committee; an important voter, but one voter. And I think the market reaction will depend on the makeup of the Federal Reserve board over the medium-term rather than a change to just one member,” Armitage said.  
 
“And it’s worth reminding people that Jerome Powell, when his term as chair finishes, has the opportunity to remain on the board for another two years.”  
 
“When we’ve got some clarity over the makeup of the board, I think that’s when investors will be able to make medium-term judgements around that. We’ve been through a period where economic data in the US has been volatile, it’s obviously been impacted by the shutdown in the US, but it’s quite clear that [inflation] is no longer just a focus of the Fed but a matter of domestic policy as well.”