Super funds delivered bumper returns in 2024, with the best of the lot, retail fund Colonial First State (CFC), notching up a near 18 per cent gain over the year.

But run-of-the-mill balanced funds, the default for most Australians, were outshone by passive index super options that returned more than 15 per cent as sharemarkets boomed.

For the second year in a row, lifecycle funds, which tip younger savers into aggressive investments before dialling back the risk as they approach retirement, came out on top, according to new data from research house SuperRatings.

Two CFS funds took first and second place with returns of 17.5 per cent, as Vanguard, Virgin Money and Mine Super rounded out the top five with gains above 15 per cent.

But the nation’s second-biggest super fund, the $300bn megafund Australian Retirement Trust, which pushed millions of its members up the risk curve mid-year in a bid to turbocharge returns in its own lifecycle strategy, failed to make the top 10.

The fund returned 13.6 per cent for calendar 2024, in line with the median growth fund, according to data from research house SuperRatings.

 

Top 10 MySuper Lifecycle options

Rank Name Growth assets % 1 year %
10 year % pa
1 Colonial First State First Choice – Lifestage 1980-84 93 17.5 8
2 Colonial First State Essential Super – Lifestage 1980-84 93 17.5 7.9
3 Vanguard Super – Lifecycle Age 47 and under 90 16.4 –
4 Virgin Money Super – LifeStage Tracker Born 1979 – 1983 90 15.6 –
5 Mine Super – Lifecycle Investment Strategy Under Age 50 97 15.6 8.5
6 AMP SignatureSuper – MySuper 1980s 85 15.2 8.1
7 Mercer SmartPath – MySuper Born 1979 – 1983 88 14.6 8.2
8 Russell iQ Super – MySuper GoalTracker Age 45 95 14.4 –
9 Aware Super Future Saver – MySuper Lifecycle High Growth 88 14.2 9
10 GuildSuper – Growing Lifestage 89 14.1 7.8

Source: SuperRatings for 12 months to 31 Dec, 2024

Of the assets in ART’s high-growth pool, its new default for members aged under 50, 97 per cent are invested in either equities or unlisteds and alternatives.

Its 65 per cent allocation to equities, and an outsized allocation to private credit, at 5 per cent of its overall assets, failed to give it enough of a boost to make it into the top 10.

 

Balanced options

More traditional balanced options, meanwhile, fell short in the race against the best-performing lifecycle funds, with the top performer, Raiz Super, gaining 14.7 per cent over the year.

ESSSuper, Aware and Brighter Super also made it into the top 10 balanced funds with returns between 12 and 13 per cent.

But passive balanced options, which rode the sharemarket wave over the year, bested their actively managed peers: Aware’s index fund was the top performer, returning 15.7 per cent over the 12 months through December, followed by Brighter Super’s index option at 15.4 per cent.

All up, the top 10 passive options, which solely track indices, returned between 15.7 and 13.5 per cent over the year.

Sustainable options

Sustainable balanced options fared even better, with the top performer, Raiz Super’s Emerald SRI option, gaining 17 per cent over the year.

Unisuper’s sustainable balanced fund wasn’t far behind with a return of 15.2 per cent.

But its greenest option, the Global Environmental Opportunities Fund, finished the year broadly flat, even with a 95 per cent allocation to equities.

SuperRatings executive director Kirby Rappell. Picture: Supplied
SuperRatings executive director Kirby Rappell. Picture: Supplied

SuperRatings executive director Kirby Rappell said funds overall had delivered positive outcomes for members in 2024 but warned the coming year could be more challenging.

“2025 could bring many potential pitfalls and sticking to a long-term strategy is important should we start to see balances falling. High levels of diversification continue to insulate members over time, resulting in impressive long-term performance by those managing our retirement savings,” he said.

 

What to expect in 2025

SuperRatings expects the year ahead to be dominated by global events, with changes in US policy following the start of Donald Trump’s second term as president, China’s economic stimulus outcomes and the Ukraine war all likely to create short-term noise across markets.

Hostplus’ balanced option remains the top performer over the long term, with an average return of 8.4 per cent a year, followed by Australian Retirement Trust’s balanced fund, at 8.3 per cent.

AustralianSuper’s default balanced option rounds out the top three over 10 years with an average annual return of 8.1 per cent.

But none of these made it into the top 10 list for 2024, as funds with more aggressive strategies won out.

Hostplus’ balanced option returned 10.3 per cent over the year, AustralianSuper’s gained 10.5 per cent and Australian Retirement Trust’s balanced option came in at 11.9 per cent.

As lifecycle and index funds ride the sharemarket wave, delivering better outcomes for members – in the short term at least – other funds are weighing up the potential benefits of such strategies.

AustralianSuper previously told The Australian it had not ruled out exploring a lifecycle option for members.

“AustralianSuper regularly reviews its products and options and a life-cycle strategy may be something that we consider in the future,” the fund’s head of superannuation and retirement product, Dena Brockie, told The Australian last year.

“Life-cycle strategies have an intuitive appeal, but they must be applied with care. There are important considerations including the fact that many members have long investment horizons, even at retirement age.

“Wealth is often the most important factor in determining a default strategy, not age, which is what most life-cycle strategies are based on.”

This article first appeared in The Australian.

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