These top super funds delivered double-digit returns in 2023 (2024)

A six-part series with tips and advice on creating a healthy super balance for your retirement.

Superannuation funds have staged a huge turnaround in 2023, with the typical balanced option returning 9.6 per cent during 2023, easily erasing the 4.8 per cent loss of 2022.

The top-performing super funds in 2023 tended to have one factor in common – a higher allocation to shares, particularly international shares.

International shares have been the standout performer over the year, with a return of 19.1 per cent, led by strong growth in tech stocks, says Kirby Rappell, the executive director at SuperRatings.

Returns were also strongly supported by Australian shares, which returned 11.6 per cent, and further bolstered by rising interest rates improving fixed interest and cash returns, he says.

Cash returned 3.6 per cent during 2023, fixed interest was up 4.9 per cent and property returned 7.1 per cent.

Super funds have many investment options from which fund members can choose, including those that invest in single asset classes, but most fund members, still working, have their retirement savings with their funds’ balanced option.

Balanced options spread the money between asset classes, but their single largest exposure is to shares, making the performance of shares the biggest contributor to their performance over the long term.

Best in 2023

SuperRatings’ figures show Hostplus Indexed Balanced was the best performing balanced investment option – those options with 60 to 76 per cent of the money invested in “growth” assets – with a return of 13.2 per cent.

That was closely followed by Brighter Super Optimiser Accumulation – Multi-Manager Growth Fund with a return of 13.1 per cent. ESSSuper – Balanced Growth took third spot with a return of 12.8 per cent.

The returns are after investment fees, tax and most administration fees and the SuperRatings’ rankings are from among the larger balanced investment options with track records of at least three years.

Though the 2023 result was a good one, there was a lot of volatility in investment markets, with swings in the monthly returns of balanced options – positive and negative – throughout the year, underlining the hazards of fund members fixating on the short term, Rappell says.

Some investment markets will do well and others not, which can lift short-term performance. Super fund members should pay more attention to long-term performance, as most will have their super for a very long time.

Best over ten years

Hostplus Balanced is the best performer over the 10 years to December 31, 2023 with an average annual compound return of 8.3 per cent. Second spot is shared by AustralianSuper Balanced and Australian Retirement Trust Super Savings Balanced, each with an average annual compound return of 7.9 per cent.

Loading

SuperRatings’ figures show the typical average annual compound return over the 10 years for the balanced category is 6.8 per cent. That puts the typical balanced option ahead of the long-term return objectives of 5 to 6 per cent that most funds have for their balanced options.

Calculations by SuperRatings shows an investment of $100,000, 10 years ago, in the median-performing balanced option would now be worth about $189,000, assuming no additional contributions have been made.

If someone had put $100,000 into the typical capital stable option 10 years ago, their account balance would have grown to about $148,000 now.

Capital stable options are more conservatively invested than balanced options, with exposure to growth assets of between 20 and 40 per cent. Capital stable options are favoured by retirees as their returns are less volatile than balanced options.

Lifecycle does well

Lifecycle investment options had a strong 2023. These are where fund members are placed into age cohorts.

They generally have high exposures to growth assets then, from about age 45-55, the growth exposure is automatically reduced.

That is different to traditional diversified options, such as balance and capital stable options, where the asset allocation is not substantially changed, but tweaked in accordance with the views of funds’ investment committees.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circ*mstances before making any financial decisions.

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.