Top Superannuation Growth Funds Of 2024: UniSuper Leads With 14.7% Return

Old cycling — ASX performed well with an 11.4% return, contributing to the success of Australian super funds. Pixabay

Australian superannuation funds had an impressive year in 2024, benefiting from lower inflation and interest rate cuts by central banks in Western countries, according to recent data.

The latest report from the superannuation consultant, Chant West, shows that many funds performed strongly, with the median Australian growth super fund delivering a solid 11.4% return, News.com reported.

According to Chant West research, the top-performing three growth funds in 2024 were UniSuper, Colonial FirstChoice, and Mine Super, with returns of 14.7%, 13.6%, and 13.4%, respectively.

These funds are categorized as "growth" super funds, which invest between 61% and 80% of their assets in higher-risk growth assets like shares. These funds continued their strong performance from 2023, which saw a 9.9% return, marking 12 positive years in the last 13.

Key drivers behind the strong performance

According to Chant West's senior investment research manager, Mano Mohankumar, the key driver of strong performance in 2024 was the international stock markets.

International shares saw a 21.2% return on a currency-hedged basis and an impressive 31.2% in unhedged terms. This performance was partly due to the Australian dollar's decline from 68 US cents to 62 US cents during the year.

Meanwhile, the Australian Stock Exchange (ASX) also performed well, delivering a return of 11.4%, which boosted the overall success of Australian super funds.

Funds with a higher percentage of shares in their investment mix generally outperformed those with a more conservative approach.

Performance of different fund types

Growth Funds (61% to 80% in growth assets) led the way with a median return of 11.4%.
Balanced Funds (41% to 60% in growth assets) achieved a median return of 8.7%.
Conservative Funds (21% to 40% in growth assets) saw a more modest median return of 6.3%.

Super Funds continue to meet long-term goals

While 2024 saw an impressive return of 11.4%, Mohankumar urged super fund members to focus on the long term. He pointed out that while this year's return was strong, it's not typical. The long-term goal for growth funds was to beat inflation by 3.5% per year, or roughly a 6% return annually.

Since compulsory super was introduced, growth funds have averaged an annual return of 8%, with inflation at 2.6%, resulting in a real return of 5.4% per year -- well above the long-term target. Even after accounting for major downturns like the Global Financial Crisis (2007-2009), COVID-19 (2020), and rising inflation and interest rates in 2022, super funds have averaged a solid 7.1% return over the past 20 years.

In addition to returns, super funds also aim to manage risk. Most funds set a risk target of no more than one negative return every five years. Over the past 32 years, there have only been five negative years, successfully meeting both their performance and risk goals.