28 January 2025
Strong performance in international and Australian share markets helped boost member returns in the six months to 31 December 20241.
Over this period, the international shares market returned 14% in Australian dollar terms and Australian shares market returned 7%. The performance of international shares was mainly led by a small handful of large US technology stocks, along with the strengthening of the US dollar. Most other asset classes delivered moderate performance but were below listed equities.
FY25 mid-year investment performance update with Chief Investment Officer Mark Delaney
-
Show transcript
Happy New Year and welcome to the latest performance update.
The first half of the financial year has been strong. Over the 6 months to 31 December 2024, members in the Balanced option earned 5.47% return in the super accumulation option and 6.06% in the Choice Income retirement accounts.
This brought the 10-year return for members in the Balanced option to 8.11% in super, and 8.87% in Choice Income, at the end of December.
Strong investment performance for the past 6 months continues to be driven mainly by listed sharemarkets, particularly international equities.
This outperformance was mainly led by the large US technology stocks, along with the strengthening of the US dollar.
Overall, the international share market returned 14% and the Australian share market returned around 7% in the 6 months to 31 December 2024.
This performance was despite the uncertainties of the US election, potential US policy changes and mixed central bank activity.
This continued the growth we've seen in listed equities over the past 2 years.
Other asset classes such as private equity, infrastructure and credit had positive but more moderate returns.
Looking forward we're expecting global economies, particularly the US, to continue growing at a healthy pace in 2025 thanks to technology developments like AI, strong employment and a potential lift to consumer sentiment.
The Trump presidency in the US could have implications for investment markets, and we are watching them closely.
New policies may impact global trade and the geopolitical landscape, bringing volatility to markets over the coming year.
More broadly, we'll continue to closely monitor markets and make the necessary adjustments to your portfolio to take advantage of investment opportunities and manage risk to support member returns.
Our absolute performance has been strong. However, our relative performance has not been as strong.
It's been a challenging environment for our active managers, as only a very small number of stocks have driven performance.
We expect this to resolve as US equity market performance broadens beyond these big tech stocks.
In the meantime, we have taken a number of actions to improve investment outcomes for members, including increasing the Balanced option’s exposure to growth assets like listed shares and repositioning the international equities portfolio.
We also continue to invest in unlisted assets to provide strong long-term returns.
Two recent infrastructure examples are Australian housing developer Assemble and US data centre platform DataBank.
Through Assemble, we have invested in a redevelopment that will deliver more than 800 apartments in Melbourne. It's a great example of how members’ money can help bolster Australia's housing supply, while delivering long-term returns for members.
As for DataBank, we plan to invest $2.2 billion Australian Dollars in this leading US data centre provider.
It's an investment that further diversifies our exposure to digital infrastructure, a sector we believe will deliver long-term performance for members.
As always, we're keen to share more about AustralianSuper’s investments, strategy and performance.
For the latest information, visit our website. Thank you.
End transcript
Members in the Balanced option benefited from a 5.47% return in Super and 6.06% in Choice Income accounts. This brought returns over the past 10 years to 8.11% per annum in Super and 8.87% per annum in Choice Income. After another positive quarter, AustralianSuper remains one of the top performing super funds over the long term. The Balanced option ranks #2 over the last 15 and 20 years for investment performance2.
For members in the High Growth option, the return for this period was 6.31% in Super and 6.99% in Choice Income accounts - driven by the higher allocations to growth assets like international and Australian shares.
Returns for all investment options over the short, medium and long term are shown below:
Super and TTR Income investment option performance as at 31 December 2024
| INVESTMENT OPTION | 3 Months | FYTD | 1 Year | 3 Years p.a. | 5 Years p.a. | 10 Years p.a. | 15 Years p.a. | 20 Years p.a. |
|---|---|---|---|---|---|---|---|---|
| PreMixed Options | ||||||||
| High Growth | 2.97% | 6.31% | 12.72% | 5.61% | 8.04% | 9.05% | 9.09% | 8.10% |
| Balanced | 2.33% | 5.47% | 10.53% | 4.68% | 6.82% | 8.11% | 8.29% | 7.70% |
| Socially Aware | 2.19% | 5.68% | 11.05% | 4.09% | 5.96% | 7.248% | 7.81% | 7.12% |
| Indexed Diversified | 2.75% | 6.96% | 13.62% | 6.02% | 7.45% | 7.49% | ||
| Conservative Balanced | 1.83% | 4.69% | 8.30% | 3.35% | 5.00% | 6.31% | 6.95% | |
| Stable | 1.28% | 3.76% | 5.93% | 2.35% | 3.33% | 4.75% | 5.54% | 5.58% |
| DIY Mix Options | ||||||||
| Australian Shares | -0.22% | 6.70% | 11.78% | 8.53% | 9.46% | 9.65% | 8.81% | 8.82% |
| International Shares | 9.64% | 10.58% | 24.90% | 7.85% | 11.71% | 11.57% | 11.29% | 8.58% |
| Diversified Fixed Interest | -0.51% | 1.55% | 1.86% | 0.13% | 0.34% | 2.07% | 4.08% | 4.22% |
| Cash | 1.08% | 2.16% | 4.23% | 2.97% | 1.90% | 1.93% | 2.49% | 3.17% |
AustralianSuper investment returns are based on crediting rates, which are returns less investment fees and costs, transaction costs, the percentage-based administration fee deducted from returns from 1 April 2020 to 2 September 2022 and taxes. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns. Returns from equivalent options of the ARF and STA super funds are used in calculating return for periods that begin before 1 July 2006.
For TTR Income accounts, the investment return is based on the crediting rate for super (accumulation) options. From 1 April 2020 to 2 September 2022 the crediting rate includes an administration fee that is deducted from investment returns for super (accumulation) accounts. TTR Income accounts were adjusted to refund the administration fee deducted from investment returns. All TTR Income administration fees are deducted from account balances.
Choice Income investment option performance as at 31 December 2024
| 3 Months | FYTD | 1 Year | 3 Years p.a. | 5 Years p.a. | 10 Years p.a. | 15 Years p.a. | |
|---|---|---|---|---|---|---|---|
| PreMixed Options | |||||||
| High Growth | 3.22% | 6.99% | 14.05% | 6.28% | 8.89% | 9.98% | 10.05% |
| Balanced | 2.52% | 6.06% | 11.51% | 5.17% | 7.44% | 8.87% | 9.17% |
| Socially Aware | 2.36% | 6.23% | 12.05% | 4.49% | 6.57% | 8.04% | 8.69% |
| Indexed Diversified | 3.03% | 7.77% | 15.17% | 6.73% | 8.32% | 8.43% | |
| Conservative Balanced | 1.98% | 5.24% | 9.18% | 3.76% | 5.57% | 7.10% | 7.79% |
| Stable | 1.36% | 4.22% | 6.64% | 2.66% | 3.69% | 5.35% | 6.26% |
| DIY Mix Options | |||||||
| Australian Shares | -0.18% | 7.49% | 13.17% | 9.63% | 10.08% | 10.86% | 10.07% |
| International Shares | 10.48% | 11.57% | 27.28% | 8.52% | 12.64% | 12.63% | 12.32% |
| Diversified Fixed Interest | -0.63% | 1.84% | 2.13% | 0.10% | 0.38% | 2.38% | 4.72% |
| Cash | 1.25% | 2.52% | 4.93% | 3.47% | 2.22% | 2.27% | 2.91% |
Choice Income investment returns are based on crediting rates, which are returns less investment fees and costs, transaction costs and taxes. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.
Focusing on the long-term
While it’s valuable to keep tabs on your super, as financial advisers repeatedly point out, super is less about short-term results and more about building your savings for the long-term.
AustralianSuper’s active management approach, long-term focus and investment in unlisted assets have delivered strong returns over the past 20 years. This is reflected in the chart below. Here we see the growth of $100,000 invested in the Balanced option over 20 years to 31 December 2024. Over this time, $100,000 has grown to $441,178 – without additional contributions, and despite market ups and downs.
AustralianSuper investment returns are based on crediting rates, which are returns less investment fees and costs, transaction costs, the percentage-based administration fee deducted from returns from 1 April 2020 to 2 September 2022 and taxes. Returns don’t include all administration, insurance and other fees and costs that are deducted from account balances. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns. Returns from equivalent options of the ARF and STA super funds are used in calculating return for periods that begin before 1 July 2006.
-
A challenging environment
While our absolute performance has been strong; our relative performance has not been as strong compared to some of our peers.
The last two years have delivered exceptionally strong listed equities performance. International shares and Australian shares have outperformed all other asset classes, including unlisted assets, by a reasonable margin. This outperformance has mainly been driven by a small handful of large US technology stocks that have benefitted from artificial intelligence, market dominance and strong earnings.
While strong equity market performance is great for member balances, it has been a challenging environment for our active managers. This is because when performance is concentrated in a small number of stocks, it’s hard to achieve better returns compared to passive strategies that simply track the market index.
We expect this difficult period for active management to resolve as the US equity market performance broadens beyond these big tech stocks.
-
Improving investment outcomes
In the meantime, we have taken a number of actions now to improve investment outcomes for members in the near term, including:
Increasing exposure to growth assets
We have increased the Balanced option’s exposure to growth assets, like Australian and international shares, based on our expectation that global economies will continue to grow at a sustainable rate. This positioning has positively contributed to improving our relative performance in 2024.
Repositioning our international equities portfolio
We are repositioning our international equities portfolio in an effort to generate more outperformance for members, including updating our mix of investment strategies across our internal and external managers. Meanwhile, we continue to build additional capabilities to manage more assets internally.
We continue to have conviction in active management – a model that has delivered a track record of outperformance for members over the past 20 years.
Investing in unlisted assets
We also continue to invest in unlisted assets which aim to provide strong, long-term returns to members. Three recent unlisted infrastructure examples are Australian housing developer Assemble, Perth Airport and US data centre platform Databank.
- Assemble, Through Assemble we’ve invested in the redevelopment of the Fitzroy Gasworks precinct. The project will deliver more than 800 apartments in Melbourne’s inner north. It’s a great example of how major investors like AustralianSuper can help to bolster Australia’s housing supply while delivering long-term returns for members.
- Perth Airport, In late 2024, we increased our stake in Perth Airport, which the Fund has been invested in for more than a decade. Perth Airport recently announced a multi-billion-dollar expansion program. This will help the airport capitalise on its shared time zone with key markets in Asia.
- Databank, We plan to invest A$2.2 billion in this leading US data centre. It’s an investment that further diversifies our exposure to global digital infrastructure – a sector we believe will deliver long-term performance for members.
-
Where are investment markets headed in 2025?
We expect global economies to continue to grow in 2025 – supported by a softer interest rate environment globally and in Australia, as well as technological developments like AI.
The Trump presidency could however have implications for investment markets. New policies could impact global trade and the geopolitical landscape more broadly. This has the potential for volatility in investment markets.
Longer term, our global outlook for investment markets is shaped by megatrends like decarbonisation, digitisation and demographic changes – presenting both challenges and opportunities for long-term investors.
Learn more at the next investment update webinar
To learn more about the Fund’s performance, our investment outlook and what this may mean for your super, join senior members of the Investment team: Alistair Barker – Head of Asset Allocation, and Amber Rabinov – Head of Thematic Research, at the upcoming investment update webinar.
Register for this event -
Investing in member services and experience
Beyond expanding our in-house investments capabilities, we’ve invested significantly to improve services for members.
Bereavement services are now handled by a dedicated in-house AustralianSuper support team, trained to assist beneficiaries during what can be an emotionally difficult time. We have also brought our complaints handling teams in-house so we can directly and efficiently resolve issues for members. And we have added more team members to our frontline contact centre, dispute resolutions teams, and insurance teams.
These investments are designed to ensure our level of service meets the standards members expect and deserve. Likewise, we remain committed to maintaining low administration fees3.
We are also pleased to confirm that we will be launching a revised Socially Aware investment option and expect to communicate these changes to members in April 2025.
References
- Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.
- AustralianSuper Balanced investment option compared to the SuperRatings Fund Crediting Rate Survey – SR50 Balanced (60-76) to 31 December 2024. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns. Returns from equivalent investment options of the ARF and STA super funds are used for periods before 1 July 2006.
- Source: Zenith CW Pty Ltd (Chant West) (ABN 20 639 121 403). Chant West Super Fund Fee Survey June 2024. Survey compares administration fees and costs for MySuper products for a $50,000 balance. Other fees and costs apply. Fees may change in the future which may affect the outcome of this comparison.
This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/PDS or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.
AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.
Compare us
Choosing the right fund could mean more money in the future, giving you more confidence in your long-term retirement plan performance.
compare us