Growth assets drive recovery for super in latest quarter: Morningstar

New research from Morningstar found super funds rebounded "strongly" in the second quarter of the calendar year, reversing weakness recorded in 1Q26.

According to Morningstar's Superannuation 360 report for Q2 2026, super returns recovered through their underlying growth-asset exposure, with higher-risk options leading the recovery, while more defensive assets experienced a mixed quarter.

Aggressive and Growth options gained 7.58% and 6.12%, respectively, while Balanced options rose 4.80%. Moderate and Flexible options also delivered positive returns of 3.48% and 3.84%, respectively, while Conservative options gained a more modest 1.92%, the report highlighted.

Morningstar recognisedwithin the Superannuation Multisector Growth peer group, comprising investment options that typically hold between 61% and 80% in growth assets, the leaders among the more widely held options were low-cost index and enhanced-index strategies.

In particular, CFS topped the chart with its Enhanced Index Growth option, returning 12.43% per year over three years.

It is followed by OnePath-BlackRock Diversified ESG Growth (11.81%), Aware Super Balanced Indexed (11.78%), Hostplus Indexed Balanced (11.76%) and Vanguard Lifecycle - Age 52 (11.63%) in the ladder.Each of these comfortably outpaced the peer-group median of 9.52% per year and each edged ahead of the Morningstar Australia Growth Target Allocation Index benchmark of 11.37% per year, Morningstar said, noting the outperformance was attributed to higher exposure to global equities, Australian equities, and real assets.

"Given their high strategic weighting in growth assets, the leading options benefited most from the sharp second-quarter rebound in global equities, where the MSCI World Index rose 12.46%, led by the US and, above all, technology stocks on renewed enthusiasm for artificial intelligence and semiconductor demand," the report said.

The report also noted the rotation back to growth-oriented sectors, including the large-cap technology, were "rewarded", and the strong showing of index-based options is consistent "with a rally concentrated in mega-cap names, which are heavily represented in capitalisation-weighted portfolios."

"The quarter was effectively a mirror image of the first quarter, when higher-risk allocations bore the brunt of equity-market weakness. By the end of June, all target-allocation indexes had moved back into positive territory for the year, though the strength of the recovery varied materially by risk profile," the report said.

"Overall, the second quarter reinforced the importance of growth exposure during market rebounds, while also showing that defensive assets provided positive but less powerful support."

Meanwhile, the domestic fixed income markets also recovered in the second quarter after a weak first quarter, with bank credit and cash returning 1.07% and 1.03%, respectively.

Furthermore, supporting contributions also came from emerging-market equities (MSCI Emerging Markets gained 22.64%, powered by Taiwan and South Korea).

The main offset was the Australian dollar's continued appreciation (up 1.15% against the US dollar), which trimmed returns from unhedged international shares and has provided a relative advantage to options with higher levels of currency hedging on their international equity exposures, Morningstar said.