Super saving fund
Since compulsory super was introduced in 1992, the median growth fund has averaged a return of 8% per year. Pixabay

Australian superannuation funds have made a strong start to 2025, building on a "tremendous" 2024 performance, driven by solid gains in both local and international stock markets.

The median growth fund, which typically invests 61-80% in growth assets, rose by 2.2% in January, according to data from Chant West.

Chant West's senior investment research manager, Mano Mohankumar, explained that the January gains were driven by solid growth both in Australia and internationally, with European stocks showing particularly strong performance early in the year.

The positive start to 2025 followed a strong 2024, with the median balanced fund delivering an 11.1% return for the year. Those who invested in high-growth funds, which allocated 96-100% to equities, saw a 3.1% gain in January alone, News.com reported.

Higher-risk investment options performed well, with stock markets thriving, while bond markets remained relatively stable.

"Over the full month, developed international shares returned 3.4% and 2.7% in hedged and unhedged terms, respectively. Australian shares fared even better, surging 4.5% given its low weighting to AI-related companies and higher exposure to financials," Mohankumar said.

"The ongoing tariff threats weighed on emerging markets shares which underperformed developed markets with a return of 1%. Bond markets were relatively flat with Australian and international returning 0.2% and 0.4%, respectively."

Though the last 13 months have been good for super fund members, Mohankumar reminded Australians to think of their superannuation as a long-term investment.

Since compulsory super was introduced in 1992, the median growth fund has averaged a return of 8% per year, well above inflation, which rose by 2.6% annually, resulting in a real return of 5.4%. This performance consistently outperforms the target of 3.5%, he pointed out.

Looking at the past two decades, which include three major market downturns -- the GFC (2007-2009), the COVID-19 crisis (2020), and the high inflation and rising interest rates in 2022 -- super funds have still managed to return an average of 7.2% per year, exceeding their objectives.