Superannuation funds defy war and inflation as four-year returns hit 44pc, says Chant West

Australia’s superannuation funds shrugged off war, inflation fears and market turmoil to return 9.5 per cent in 2025-26, extending their run of 9 per cent-plus gains to four years.

Across that run, the median growth option has gained 44 per cent since the post-pandemic market recovery began, according to superannuation researcher Chant West.

Its benchmark tracks the middle-performing growth option across the industry, covering portfolios with between 61 and 80 per cent invested in growth assets such as shares, property and infrastructure.

“Generally speaking, the better-performing funds were those that had higher allocations to international shares,” Chant West head of super investment Mano Mohankumar said on Monday, with enthusiasm for AI and strong corporate earnings lifting overseas markets.

Global shares returned 25.5 per cent when hedged and 17 per cent unhedged, with the stronger Australian dollar eating into offshore gains.

International shares also make up about 31 per cent of a typical growth option, giving their gains greater influence over the final result. Australian shares account for about 24 per cent and returned a more restrained 6.2 per cent.

The gains reached beyond the dominant US technology stocks.

AustralianSuper chief investment officer Shaun Manuell said the benefits were spreading into “more regions, industries and asset classes” as the AI cycle matured.

Hostplus chief investment officer Sam Sicilia pointed to Taiwan and South Korea as other beneficiaries.

“Technology-driven growth is not confined to the US or the Magnificent Seven,” Mr Sicilia said.

The strong annual result concealed a sudden fall and recovery late in the financial year.

Rainmaker Information’s MySuper index dropped 3.4 per cent in March after conflict broke out in Iran, then recovered 2.7 per cent in April and another 2.3 per cent in May. It finished the year up an estimated 9.3 per cent after fees and tax.

A member who began the year with $100,000 and switched to cash after the March fall would have finished more than $5000 behind someone who stayed invested, Rainmaker estimated.

Chant West also found defensive assets offered less help, with cash and bonds producing low-single-digit gains. Australian listed property was the only major asset class to lose ground, falling 1.8 per cent.

Mr Mohankumar said unlisted infrastructure, private equity and property were “expected to finish ahead”, but well behind global shares.

Australian Retirement Trust, the country’s second-largest super fund with more than $370 billion under management, reported the same divide — listed markets carried its diversified portfolios while unlisted assets lagged.

Even so, ART invested another $12b in the murky asset class during the year, arguing that lower valuations were creating better long-term opportunities.

The biggest funds broadly followed the industry pattern.

Hostplus produced the strongest result among the top five default-style options by member size, with its Balanced MySuper option returning 10.8 per cent.

Rest’s Growth option returned 9.8 per cent, while $410b super giant AustralianSuper’s Balanced option gained 9.7 per cent.

Higher-risk options generally did better because they held more of the global shares leading markets. Hostplus, Rest and AustralianSuper each reported double-digit returns from their High Growth options.

ART and Aware Super delivered more restrained one-year returns from their High Growth options, at 9.2 per cent and 8.5 per cent, respectively, but retained stronger 10-year averages.

AustralianSuper chief investment officer Shaun Manuell said the year showed why members should not place too much weight on short-term market swings.

“It is always important to look at the bigger picture and 12 months is not that long in the scheme of things, especially in superannuation,” he said.

Mr Mohankumar also warned that four straight returns above 9 per cent should not be “mistaken for the norm”.

Growth options generally aim to beat inflation by about 3.5 percentage points over time, which translates to a return of roughly 6 per cent a year.

Since compulsory super began in 1992, the median growth option tracked by Chant West has returned 8 per cent a year and recorded just five negative financial years in 34.