SuperRatings executive director Kirby Rappell said the results showed that some super funds were unprepared for the bear market’s swift return, having enjoyed some blockbuster returns during the decade-long bull run in global sharemarkets.
“Over the past decade, we saw more emphasis on growth,” Mr Rappell told The Australian Financial Review. “I think we’re seeing a re-emergence on the need for an emphasis on risk and downside protection, as we get a lot more market volatility.”
But he said retirement savers should still take “comfort” from the ranking, given the broader market downturn, with the Dow Jones Industrial Average down 16 per cent and the S&P/ASX 200 down 13 per cent.
“For most people, if you look at it over the last year, the movement either up or down is pretty muted. Obviously, this comes off the back of a median return of 18 per cent the prior year, and some funds returning over 20 per cent,” the analyst said.
“People haven’t seen huge growth or huge losses in their balances, which I think, on reflection of the year we’ve had, is probably not a bad result.”
Nonetheless, some of the best performers over the long term were hit hard during the past financial year.
Construction industry fund Cbus, which is ranked fourth overall over 10 years, was down by 3.8 per cent over one-year and outside the top ten performers. UniSuper, which is fifth-best over the 10 years, was down by 4.2 per cent.
Despite topping the ranking, Hostplus’s Indexed Balanced fund – which adopts a passive investing style tracking the broader market and was recommended by bestselling author Scott Pape in The Barefoot Investor – made a 5.7 per cent loss.
Hostplus chief investment officer Sam Sicilia said the fund’s decision to reduce its exposure to bonds to near zero in 2015 – and stick to the asset allocation throughout the volatility of the pandemic – helped the fund achieve the nation’s only 1 per cent-plus return.
“Equity and bond markets have, independently, delivered negative returns at a level that we have not seen since the GFC,” he said.
“Together, they have performed at levels not seen for more than a generation. We instead chose to invest in mid-range defensive assets such as infrastructure and unlisted assets. Being overweight in assets such as property and infrastructure provided all-important inflation protection.”
On average, balanced MySuper funds made a loss of 3.1 per cent for the financial year, said SuperRatings.