Retail funds outperform, but industry funds dominate

Latest research shows retail super funds hit back in 2019, outperforming industry super funds across the year as impact of a tough final quarter in 2018 begins to fade.

New analysis from Rainmaker published by SelectingSuper shows retail super funds outperformed their not-for-profit fund counterparts last year, earning around 63 basis points more thanks to a 15.19% return which was largely underpinned by the sector's propensity to gear its investments towards equities and property.

However despite the good year for retail funds, large industry funds took the majority of top spots in SelectingSuper's personal and workplace super performance tables for 2019, with AustralianSuper, UniSuper, Hostplus and First State Super all cementing their dominance in the last three years as regulatory headwinds hit the sector.

According to SelectingSuper performance tables for the year ended December 31, AustralianSuper's default investment option was the best performing default option in personal super over the last three years, returning 10.2%.

Next best were Hostplus and UniSuper's personal balanced options, which both returned 10% over the same period of time.

The best performing retail fund option was Virgin Money's lifestage tracker 1974-1978, which picked up 9.8. The only other retail fund to finish among the top 10 default personal super options was BT thanks to the 9% three year performance of its Super for Life savings 1970s BT Lifestage Fund.

The story was much the same when it came to workplace options.

The 10.2% return of AustralianSuper's balanced option again led the way among MySuper and default investment options, while TASPLAN's On Track Build option took second spot with 10.1% over three years.

Two corporate super options cracked the top 10, with Mercy Super's MySuper product and Telstra Super's Corporate Plus MySuper Growth option both returning 9.4% over three years.

MySuper products earned 15.2% for the year ending December 2019 according to the analysis, representing the sector's best performance in six years and its second best single year return of the last 15 years, as the impact of a poor quarter of performance in December 2018 begins to drop away.

Rainmaker head of superannuation research Jason Ross said that importantly, super fund members were still being served well thanks to a decade of positive results despite increasing regulatory pressure and constant legislative change.

"The latest results are a combination of over 10 years of positive year-on-year returns by super funds and financial markets finishing 2019 on a positive note," Ross said.

"Super funds continue to provide solid long term return for members."

Ross acknowledged the performance of ESG investment options, noting the median performance ESG super option returned 16.2% over the last year, while the median MySuper option brought home just 14.7%.

Read more: AustralianSuperSelectingSuperBTHostplusUniSuperFirst State SuperMercy SuperTASPLANTelstra SuperVirgin Money
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