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SelectingSuper Media Release - Wednesday 9 May 2018


MySuper default superannuation products delivered an average 7.4% into their members' accounts for the 12 months to end March 2018.

This is the second consecutive month where rolling 12 month returns have fallen. At the end February it was 9.6% and at the end of January it was 11.7%. This compares to June 2017 when the average MySuper default option delivered 10.4%.

MySuper default investment options are the flagship segment of Australia's superannuation system holding an estimated $635 billion on behalf of the two thirds of Australian workers who use these superannuation products..

Pushing investment returns down were relatively large falls in returns from Australian and international equities in the month of March - the S&P/ASX 200 Accumulation Index fell nearly 4 percentage points while the MSCI All Countries Index fell 2.2% in local currency terms and fell 0.5% in Australian dollar terms (most super funds have around half their international equities exposure hedged to Australian dollars).

But offsetting these poor returns from equities, real assets in the form of property and infrastructure both recorded positive results in the month. Listed international infrastructure (hedged to Australian dollars) returned 1.8% in March.

Fixed income, i.e., bonds, albeit with the exception of high yield, did very well in March with returns of around 1%. Note that these bond returns reflect the capital returns on their portfolio value rather than interest rate yields paid on investment such as cash term deposits.

As a result of these asset class effects, the Rainmaker SelectingSuper workplace Default/MySuper Index showed a negative monthly return of 0.8% in the month of March.

In February the index returned an average -0.3% compared to +0.8% in January. In the past 12 months the index delivered a positive outcome 10 times.

Stephen Fay, head of superannuation research at Rainmaker Information, said: "Since equities is the largest component of most super funds they have an oversize impact on performance. Within equities, the other major factor is the asset allocation split between Australian and overseas equities, and whether the overseas equities component is currency hedged or not."

"These choices have had a particular impact in the past 12 months. Australian equities returned 2.5% over this period versus 10.8% for currency hedged overseas equities. Unhedged overseas equities performed even better, returning 13.9%."

"Fixed interest is often seen as a portfolio diversifier," he said. "But in this case both Australian and international fixed interest had modest returns over 12 months of 3.3% and 2.9% respectively."

Adding to this, "Australian listed property remains disappointing, returning -0.8% over 12 months. Direct property, generally less volatile on a month to month basis since returns are estimated from professional valuations, had stronger returns over both the month of March (nearly 2%) and over 12 months (nearly 16%), based on the Financial Standard Direct Property Index."

Despite recent short term volatility, performance over multi-year time periods continues to benefit from the positive impact of the generally high returns since 2012. Average five year default super returns are a healthy 8.5%pa thanks largely to high returns from both Australian and international equities.

Australia's top performing MySuper products

Australia's top performing MySuper products in Workplace, Personal and Retirement markets over the 12 months to March 2018 are described in the following table.

HOSTPLUS - Balanced 10.8%
AustSafe Super Industry - MySuper (Balanced) 10.6%
Intrust Core Super - MySuper 10.3%
Statewide Super - MySuper 9.9%
AustralianSuper - Balanced 9.7%
AustSafe Super Personal - MySuper (Balanced) 10.6%
Intrust Select Super - Balanced 10.3%
AustralianSuper Personal - Balanced 9.7%
Catholic Super Personal - Moderately Aggressive 9.6%
Club Plus Super Personal - Balanced 9.6%
AustSafe Super Pension - Balanced 12.3%
Intrust Super Stream - Balanced 11.3%
AustralianSuper Choice Income - Balanced 10.7%
MyLife MyPension -  Moderately Aggressive 10.6%
AustralianSuper Choice Income - Balanced 10.6%

Source: Rainmaker Information                                                                                            

"It's worth noting that the accolades are shared by large and small funds. AustralianSuper and Hostplus make several of these Top 5 lists and so do boutique super funds AustSafe, Intrust and Catholic Super, " said Fay.

Segment Performance

The average not-for-profit (NFP) fund delivered 8.0% compared to the average Retail fund that delivered just 5.8% for the 12 months ending March 2018.

This results in a segment gap in the Workplace sector of 220 basis points for the 12 month period ending March 2018. In the month of March alone the segment gap was 80 basis point.

The long term 5 year segment gap is however lower at 150 basis points in favour of NFP funds.

Fay said: "Over five years the cumulative impact of these differentials mean that the average NFP fund member would have an extra 8% in their superannuation account compared to the average Retail fund member."

Source: Rainmaker Information                                                                                     
Source: Rainmaker Information                                                                                          
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