Super funds in calendar 2018 delivered their worst performance in seven years, returning an average of just 0.8 per cent across growth funds, research shows.

QSuper Balanced achieved the highest return of 2.8 per cent return, according to superannuation and pension research firm Chant West. This was followed by HESTA Core Pool, which returned 2.5 per cent, and Club Plus MySuper Balanced and Hostplus Balanced, which both returned 2.2 per cent.

While the annual performance figures look disappointing, Chant West senior investment manager Mano Mohankumar emphasises the importance of a long-term perspective.

"If you try to time the market by moving into a more conservative option after sharp share market falls, not only do you crystallise your losses but you also risk missing out on all or part of the subsequent rebound when markets recover.

“So be aware of how your fund has performed over the past year but remember that what’s more important is whether it’s achieving its long-term objectives," he says.

Over longer periods of between three and 15 years, each of the super fund asset class strategies measured by Chant West met their return objectives. These range from Consumer Price Index plus 2 per cent for conservative funds, to CPI plus 4.75 per cent for growth. 

 Top performing growth funds over 15 years (to December 2018)*

Super fund returns 15 years

 Source: Chant West

Mohankumar said the result was impressive in the context of jittery equity markets, particularly in the December quarter. The Australian share market as a whole fell 3.1 per cent in 2018, and international shares declined 7.5 per cent.

The strongest performing growth funds in 2018 were those with higher allocations to unlisted assets – infrastructure, property and private equity – and to bonds.

An allocation to unhedged international shares also helped, according to Mohankumar, because the depreciation of the Australian dollar turned the unhedged loss of 7.5 per cent for that sector into a 1.5 per cent gain in unhedged terms.

Australian and international shares were the biggest detractors, followed by global listed property and global listed infrastructure.

Chant West defines growth funds as those that hold between 61 per cent and 80 per cent in Australian and international shares.

However, not all funds ended the year in the black. There were several funds in the growth category that delivered negative returns, with the worst performer losing 2.5 per cent.

Balanced funds, which Chant West defines as those with between 41 per cent and 60 per cent in equities, returned 1 per cent. Conservative funds, with equities allocations of between 21 per cent and 40 per cent, returned 1.6 per cent.

The 2018 0.8 per cent median result extends the run of positive growth years for super funds to seven.

Growth fund returns by calendar year (%)

Superannuation returns

Source: Chant West