The top Australian super funds of 2023 revealed
Super funds with aggressive growth strategies delivered the strongest returns
3 min
Impressive share market gains in 2023 boosted the performance of Australian superannuation funds last year. All-growth super funds primarily invested in Australian and international shares delivered an outstanding 13.1 percent return, while conservative super funds containing fewer shares and more defensive assets such as bonds and cash booked a respectable 6.2 percent return.
Chant West has released its annual review of superannuation funds and revealed the top 10 performing funds among those with the median growth strategy. Super investors can choose between several types of strategies depending on their risk tolerance and stage of life. Typically, young Australians may prefer higher growth strategies because they have a longer time horizon to grow their super and can therefore tolerate more risk. Older workers closer to retirement tend to prefer balanced or conservative strategies that aim to preserve capital and deliver lower-risk gains.
Chant West revealed the performance of five different fund strategies common among Australian superannuation funds. All–growth super funds, which comprise 96 to 100 percent growth assets such as shares, delivered a median 13.1 return for investors. High-growth super funds with 81 to 95 percent growth assets delivered an 11.4 percent return. Median growth funds with 61 to 80 percent growth assets delivered 9.9 percent. Balanced funds with 41 to 60 percent growth assets returned 8.1 percent and conservative funds with 21 to 40 percent growth assets returned 6.2 percent.
Chant West senior investment research manager Mano Mohankumar said share markets in Australia and overseas performed well in 2023 and this was the biggest factor in super funds’ gains last year.
Mr Mohankumar said: “International shares was the standout asset class with a tremendous 23 percent return over the year, led by the tech sector which benefitted from advancements in AI. While Australian shares didn’t reach the same level, it still delivered a healthy 12.1percent over the same period.”
Share market returns include share price growth or capital gains, as well as dividends. Defensive assets also provided solid returns last year, with Australian bonds delivering 5.1 percent, international bonds 5.3 percent and cash 3.9 percent.
The top 10 median growth super funds are listed below, with the returns shown being net of investment fees and taxes but before administration fees and financial advisor commissions.
Chant West said the 9.9 percent delivered by median growth funds erased their 4.6 percent loss in 2022. That was the first year in 11 years that median growth funds recorded a fall in value. Mr Mohankumar said super funds had proven their resilience and robustness, particularly during recent years amid a once-in-a-century pandemic, rapidly rising interest rates and a global economic slowdown.
He pointed out that over the long term, Australian super funds have delivered above-target outcomes. He said the typical long-term objective for growth funds is to beat inflation by 3.5 percent per annum, which translates to just over 6 percent returns. “Since the introduction of compulsory super, the annualised return is 7.9 percent and the annual CPI increase is 2.7 percent, giving a real return of 5.2 percent per annum – well above that 3.5percent target,” he said.
“Even looking at the past 20 years, which includes three major share market downturns – the GFC in 2007-2009, COVID-19 in 2020 and the high inflation and rising interest rates in 2022 – super funds have returned 7.3 percent per annum, which is still comfortably ahead of the typical objective.”
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The federal budget has rattled property investors. But the biggest mistake isn’t the tax changes, it’s the conclusion many are drawing from them.
2 min
The recent budget has forced a reckoning for property investors.
Negative gearing now restricted to new residential builds, the CGT discount gone and on paper, the numbers look different.
And many investors are responding by pivoting toward yield, prioritising cash flow over capital growth in a way that property strategists say misses the point entirely.
“The debate has shifted to yield versus growth as if they are opposing forces,” says Abdullah Nouh, founder of Melbourne-based buyers’ agency Mecca Property Group. “But that framing is itself the mistake.”
Nouh, who works with high-net-worth families and investors on long-term acquisition strategy, argues that capital growth remains the primary driver of genuine wealth creation and that the post-budget environment has made quality assets more important, not less.
The numbers make his case plainly. An additional $500 per week in rental income is welcome. A prestige asset appreciating by $1 million over a market cycle is transformative.
These are not equivalent outcomes, and portfolios built around yield at the expense of location and land value tend to generate income while wealth stands largely still.
The more nuanced shift Nouh is seeing among sophisticated investors is a move toward assets where both outcomes can be engineered simultaneously – established homes on substantial land in quality locations, where the existing dwelling can be repositioned, rental returns improved, and the underlying land value compounds independent of what sits on it.
For investors with existing equity, commercial property is also entering the conversation in a more serious way.
Prestige industrial assets, medical centres and long-leased essential retail offer income profiles that residential property in most capital city markets cannot currently match: longer lease terms, tenants covering outgoings, and greater predictability than the residential tenancy cycle.
“The investors who build lasting wealth are rarely the ones who chased yield or growth exclusively,” says Nouh.
“They are the ones who built a strategy they could sustain – one that generated enough income to hold quality assets through multiple cycles while those assets compounded in value.”
The budget has changed the settings. It has not changed the fundamentals.
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