Long-term returns remain strong despite short-term market volatility

4 July 2022 

It’s been a year of ups and downs in investment markets, both globally and locally. For AustralianSuper members, this is only the fourth time in 36 years where the Balanced option has experienced a negative annual return. For those in retirement with Choice Income accounts, it’s only the second time since 2008 (when Choice Income was launched) that returns have been negative. While this can be unsettling to see, it’s important to look at performance over the long term - with super, that’s the number to focus on.

With your super it's important to look at long-term performance. The average return over 10 years for AustralianSuper’s Balanced option is 9.32% per annum to 30 June 20221. For the Balanced option for Choice Income accounts, the 10 year average return is 10.27% per annum.1

This financial year (1 July 2021 – 30 June 2022) has been one of market ups and downs. Falls in global investment markets over the first 6 months of 2022 resulted in negative annual returns for both accumulation and retirement accounts. For members in the Balanced option the annual return is of –2.73%. For members in the Balanced option for Choice Income accounts the annual return is -3.02%.1

 

AustralianSuper is a top-performing fund over the long term

AustralianSuper is ranked number 2 over 7, 10 and 20 year performance making it a top-performing fund over the long term2. We're focused on helping members achieve their best financial position in retirement.2

 

2021 - 2022 End of financial year investment performance update with Chief Investment Officer Mark Delaney

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Events impacting performance in the last 12 months

Over the past financial year a range of events have affected the economy and investment markets. In the first 6 months, investment markets benefited from the economic recovery following the COVID-19 downturn.

More recently, pent-up demand from consumers, supply chain blockages and the war in Ukraine have all contributed to price rises for people’s day to day spending – both at home and globally. Central banks responded to these events by raising interest rates.

Investors are becoming more cautious about the impact of price hikes and interest rate increases on consumer spending and business profitability. This has resulted in a fall in investment markets, which has impacted member balances across the super industry.

The benefits of diversification

Market ups and downs are a normal part of investing and are something our investment team is prepared for.  

Our long-term investment strategy is designed to be resilient when markets are volatile. The Balanced option is a diversified portfolio, investing across many asset classes, sectors and geographies. The benefit of this diversification is to cushion the impact of downturns, while making sure members benefit as markets recover.

This year, positive returns in unlisted infrastructure, unlisted property, private equity and private credit have all helped to cushion the fall in global share and bond markets.

The Australian share market has returned -6.5% and the international share market has returned -8.1% for the 12 months to 30 June 20223. In comparison the Balanced option has delivered a return of –2.73% in accumulation accounts and –3.02% in Choice Income accounts.

 

The importance of a long-term investment view

History shows that market downturns and recoveries are expected over the lifetime of superannuation investing. In the Balanced option we estimate the option could have about 5 negative annual returns over any 20-year period4.

Having a long-term focus provides members with a more realistic perspective of superannuation investment returns. Even members in or close to retirement could still have their super invested for another 10-20 years at least. 

Read more: Market cycles and super – it’s all about the long term

 

Long-term returns for the Balanced option 

The table below shows the Balanced option returns over the long and short term, compared to the median Fund. AustralianSuper remains a top performing Fund5.

Balanced option Super– returns to 30 June 2022 
Super returns
Time period to 30 June 2022  Balanced option  Benchmark – median return 
1 year  -2.73%  -3.44% 
5 years pa  7.28%  5.94% 
10 years pa  9.32%  7.99% 
20 years pa  7.84%  7.04%
Source: AustralianSuper data as at 30 June 2022. Benchmark data: SuperRatings SR50 (Balanced (60-76) Index- media return. Returns from equivalent investment options of the ARF and STA super funds are used for periods before 1 July 2006.
Balanced option for Choice Income accounts – returns to 30 June 2022
Account based pension - Choice Income Balanced option returns
Time period to 30 June 2022  Balanced option  Benchmark – median return 
1 year  -3.02% -4.09%
5 years pa  7.89% 6.38%
10 years pa  10.27% 8.92%
Source: AustralianSuper data as at 30 June 2022. Benchmark data: SuperRatings SRP50 (Balanced (60-76) Index- median return.

 

Growth of a $100,000 super balance over the long term 

The below chart shows how much your super balance would've grown from a starting point of $100,000, over 1, 3, 5, 10, 15 and 20 year periods to 30 June 2022. 

Time period to 30 June 2022  Performance (p.a)  Value of $100,000 for the time period invested 
1 year  -2.73%  $97,269 
3 years   5.59%  $117,758 
5 years   7.28%  $142,137 
10 years  9.32%  $243,914 
15 years  6.13%  $244,178 
 20 years  7.84%  $453,258 
AustralianSuper investment returns are based on crediting rates, which are returns less investment fees, the percentage-based administration fee deducted from returns and taxes.  Returns don’t include all administration, insurance and other fees and costs that are deducted from account balances. Returns from equivalent investment options of the ARF and STA super funds are used for periods before 1 July 2006. Investment returns aren’t guaranteed.  Past performance isn’t a reliable indicator of future returns. 

For example, if you had a balance of $100,000 20 years ago your super balance would now be $453,258. If you started 5 years ago with a balance of $100,000 your super balance would now be $142,137.  

You can view the investment returns for all our investment options on our Performance page. 

 

View long-term Performance

 

Looking ahead

After more than a decade of strong growth, our outlook suggests we’re entering a period of weaker economic growth may see lower returns than in previous years. 

As the economic cycle progresses and markets respond, the investment team will continue to adjust the portfolio. This helps manage risk and allows us to take advantage of long-term investment opportunities. 

Read more: Understanding investment market cycles

Super projection calculator

Investing in your future now could make a big difference. Our Super Projection Calculator can help you work out if you’ll have enough income for your retirement needs, estimate how long your super could last, and see the difference adding to your super now could make to your retirement in the long run. 

Before you start, think about how much you'll need to retire and when you’d like to retire. 

 

Try the calculator now

 


References:
1. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns. 
2. AustralianSuper Balanced investment option compared to the SuperRatings Fund Crediting Rate Survey, SR50 Balanced (60-76) Index to 30 June 2022. Returns from equivalent investment options of the ARF and STA super funds are used for periods before 1 July 2006. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns. 
3. S&P/ASX 200 Index and MSCI All Country World ex Australia Index (in AUD). 
4. This statistic is calculated by simulating the probability of an investment option delivering a negative annual return in any one year and multiplying this by 20. This provides an estimate of how often you can expect to receive a negative annual return in any 20-year period.  
5. AustralianSuper Balanced investment option compared to the SuperRatings Fund Crediting Rate Survey - SR50 Balanced (60–76) Index and SRP50 Balanced (60-76) to 30 June 2022. Investment returns aren’t guaranteed. Past performance is not a reliable indicator of future returns.   

This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/pds or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.

AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.

 


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