Australia’s super funds have ended the 2022-23 financial year on a high, delivering a strong performance in June.
Equity markets showed resilience and strength throughout the last month of the economic year, providing a much-needed boost to super balances.
Leading superannuation research house SuperRatings estimates the median balanced option delivered a solid 1.2 per cent return in June. This positive performance has contributed to an impressive annual return of 8.5 per cent for the year ending 30 June, compensating for the 3.4 per cent loss experienced last year.
Kirby Rappell, executive director of SuperRatings, says the result is a testament to superannuation’s resilience as an investment, particularly in the face of global economic uncertainty.
“While there are significant conversations about interest rate rises, inflation and global uncertainty front and centre within the economy, it is reassuring to see superannuation funds’ ability to deliver a competitive outcome for everyday Australians,” he says.
“While economic pressures are hard to ignore, superannuation continues to perform well on a long-term basis with most funds managing to keep performance in line with the typical CPI+3.0% investment objective over 10 and 30 years.”
The median growth option recorded an estimated return of 1.4 per cent for the month, while capital stable options, which focus on defensive assets such as cash and bonds, delivered a 0.3 per cent return.
Pension returns also ended the financial year on a strong note, with the median balanced pension option experiencing a 1.3 per cent increase in June.
The median growth option for pensions rose by 1.6 per cent, while the median capital stable option is expected to provide a 0.3 per cent return for the month.
International equities emerged as the top performers for super funds this year, with Australian equities and listed property also contributing to the overall strong performance.
However, unlisted assets had a slight negative impact on returns, as several funds wrote down their valuations.
SuperRatings emphasises the importance of setting a long-term strategy for your super and not being alarmed by short-term market fluctuations.
“We expect the ups and downs observed over the last 12 months to continue and members should be prepared for their balances to fluctuate,” he says.
“If you are not approaching or in retirement, keep in mind that all market movements in the short term are not likely to be what you are thinking about when you retire in 20 or 30 years’ time.”
How did your super perform in the last month of the financial year? What did it mean for your annual return? Let us know in the comments section below.