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July 14, 2021 by ash

Shares and property drive Australian superannuation funds to their best performance in 34 years

Australia’s 13.5 million members of superannuation funds enjoyed their best performance since 1986-87, and property and shares played a major part.

The Rainmaker Default MySuper Index, which tracks the performance of superannuation funds’ default products, recorded a 2020-21 financial return of 18 per cent after fees and taxes.

The 2020-21 performance is the best recorded by Australian superannuation funds since the 1986-87 financial year, which was just before the 1987 market crash.

The best performing assets for Australian superannuation funds

Listed property and shares were the best performing assets for Australian superannuation funds.

These returned 33 per cent and 28 per cent respectively.

Global infrastructure returned 20 per cent although unlisted property returned only 3.6 per cent.

Debt securities performed poorly with local bonds and international bonds returning -0.8 per cent and 0.2 per cent. With interest rates near zero, cash followed suit.

Alex Dunnin, Rainmaker’s executive director of research and compliance said the performance meant total earnings came in at $520 billion, equating to $39,000 per member.

“This is three times the amount of all the money everyone contributed into their superannuation accounts through the year, six times the amount of all the compulsory Superannuation Guarantee contributions or 17 times what was paid in fees,” he said.

ESG funds no longer outperforming

One curious trend that was different from last year was the performance of ESG super funds, or rather the lack of.

Last year, ESG funds were outperforming their peers with Rainmaker’s ESG superannuation indexes regularly over 1 per cent above standard indices.

But on a 12-month basis, the index tracked 1.6 percentage points below the standard index over the past year.

“Super fund ESG investment managers seem to right now be under-performing some of the major ESG capital market benchmarks,” Dunnin noted.

“As important as ESG is, the primary job of super funds will always be delivering the maximum investment returns they can.”