Growth super funds enjoy long run of positive returns
In this article we look at how a long-term investment in superannuation can help grow your retirement savings over time.
According to Chant West growth fund data1, the 2018/19 financial year was the tenth consecutive year of positive returns for members invested in growth assets (like shares). In other words, members in growth funds have seen their balances go up every year since the end of the GFC in March 2009, with negative returns in just three of the last 27 years (since 1993), as the Chant West Growth Fund chart below shows.
It’s important to note, however, that this data may not be true for all funds.
Super returns resilient in FY 2018-19
The good news for super fund members is that Australian and international share indices rose more than 11% last financial year2 , despite bouts of market volatility in late 2018. The strong recovery in both share and bond markets in the first half of 2019 boosted the performance over the full financial year.
According to Chant West senior investment research manager, Mano Mohankumar3:
“This year’s median return of 7.1% is a terrific result in the circumstances and, as always, some individual funds will have done better and some worse. This year's top funds in our Growth category may report a return as high as 10%, which is about 8.5% above the inflation rate. Even funds at the bottom end of the range are likely to deliver respectable positive returns.”
The median return in the SuperRatings SR50 Index4 - the biggest survey for default super funds - was also 7.1% for the 2018/19 financial year. The survey also reveals that since 2008/09 (when growth funds returns fell 12.9%), the median growth fund has delivered a return of 8.6% over a rolling ten year period to 30 June 2019.
- VicSuper continues to deliver solid investment returns to help grow members’ retirement savings. For the 2018-19 financial year, the VicSuper FutureSaver Growth (MySuper) investment option returned 8.20%, which put it in the top 10 performing funds over 7 and 10 years in the SuperRatings SR50MySuper Index5
- This is a great outcome and shows how VicSuper is delivering solid long-term investment returns that can help deliver value in retirement for our members.
In it for the long haul
Ten straight years of positive super returns for the median growth fund is certainly a remarkable achievement but markets do not go up indefinitely. Because super is by nature a long-term investment, it’s wise to focus on superannuation investment returns over a period of ten years or more. Unlike (say) short-term cash investments, super is about ‘time in the market’ which through the magic of compounding (cumulative gains of investment returns) can really help boost a person’s retirement savings. Even a small difference in the performance of a person’s super investment each year can make a big difference to the money you have in retirement.
Also, it’s vital that while you’re still working, your super is working hard for you by being invested in a way that’s right for you e.g. an investment option that suits your risk profile, that invests in asset classes and over a time horizon you’re comfortable with, and that suits your preference for sustainable investments.
It can help to talk to someone about your super – even if you just want to find out more about your investment options and how we invest your money. At VicSuper, you can get superannuation and retirement advice at no additional cost in most cases. For more information about our advice services, go to vicsuper.com.au/advice
For more information about how we deliver different sources of investment returns for our members, go to vicsuper.com.au/investments
This is general information only and does not take into account your specific objectives, financial situation or needs. We recommend you seek professional advice for your own circumstances. Contact us to make an appointment to see one of our representatives. When members receive advice, they receive it under our financial planning business Aware Financial Services Australia Limited’s own AFS licence. Aware Financial Services Australia Limited ABN 86 003 742 AFSL 238430 is wholly owned by Aware Super Pty Ltd as trustee of the fund. You should read their Financial Services Guide before making a decision. Issued by Aware Super Pty Ltd ABN 11 118 202 672, AFSL 293340, the trustee of the Aware Super ABN 53 226 460 365.1 Source: Chant West. Super Funds Deliver Ten Straight Positive Years To Break Record. 27/6/19
2 Source: VicSuper; financial market data as of 30 June 2019
3 Source: Chant West. Super Funds Deliver Ten Straight Positive Years To Break Record. 27/6/19.
4 The SuperRatings SR50 MySuper Index is a survey of the default balanced and growth funds across the super industry
5 Returns for the VicSuper FutureSaver Growth (MySuper) investment option over the 7 and 10 years put VicSuper in the top 10 performing funds, and returns for the VicSuper FutureSaver Growth (MySuper) investment option were in the top quartile over 1 year, 7 years and 10 years in the SuperRatings Fund Crediting Rate Survey (SR50 MySuper Index), as at 30 June 2019. Median returns for rolling 3 years were 8.88% in the SR50 MySuper Index as of 30 June 2019. Note that past performance is not a reliable indicator of future performance.