Strong share markets put Aussie pensions on track for big returns

Australian superannuation funds are set to post another bumper financial year as strong financial markets lift returns of higher-risk funds towards and beyond double figures.

Thanks to share markets surging again since May 31 , super ratings group ChantWest is tipping a 9 per cent return on so-called median growth funds with 61 per cent to 80 per cent of assets in shares and other riskier assets.

And with the value of risk-focused portfolios estimated to have risen around 1 per cent this month, so-called high-growth super portfolios look set to head to returns around 10.5 per cent.

These high-growth portfolios, with as little as 5 per cent of investor funds in lower-risk assets, had already enjoyed 9.6 per cent growth in the 11 months to May 31.

Portfolios with 100 per cent riskier assets had enjoyed 11.3 per cent growth by May 31, and could return average a happy dozen for keen punters in 2023-24 if markets stay strong.

Chant West research boss Mano Mohankumar said resilient share markets, particularly overseas, were the primary driver of the healthy returns so far in 2023-24.

Mr Mohankumar said a 9 per cent return for growth funds would be an “excellent outcome” given global tensions and the uncertainty around inflation and interest rate cuts.

Pointing to the better than expected result of 9.2 per cent for growth funds in 2022-23, Mr Mohankumar said it was easy to forget the 2021-22 financial year had ended with big market falls and anxiety about interest rate hikes.’

“The experience over the past two years is another reminder of the importance of remaining patient and not getting distracted by shorter-term noise,” he said.

“More importantly, super funds continue to meet their long-term return and risk objectives.”