Returns revert to the straight and narrow

As everyone knows, the GFC blew a mighty hole in superannuation accounts. The road to recovery has been a long and winding one. But the improvement in returns has really kicked up over the past 18 months and into this year.

As everyone knows, the GFC blew a mighty hole in superannuation accounts. The road to recovery has been a long and winding one. But the improvement in returns has really kicked up over the past 18 months and into this year.

SuperRating's data shows that so far this calendar year the median-performing balanced option, where most people have their super, returned just over 14 per cent.

You have to go all the way back to 2005 to find a return, over a calendar year, of similar magnitude. Since superannuation accounts reached their lowest point of the GFC in February 2009, balances have bounced back by almost 60 per cent. The actual balances for those working will be better than that because the measurement is based on investment returns only, and does not include contributions.

Going back a full 10 years to 2003, SuperRating's data shows an initial $100,000 invested then would be worth almost $200,000 now, even more if contributions are included.

The median-performing balanced option has produced an average annualised return of 7 per cent over the past 10 years. That is a return of more than 4 percentage points above inflation over that time.

The main reason for the good performances since the GFC is the strong recovery in shares, particularly over the past 18 months.

Of course, the poor performance of shares was also the main reason for the woeful performances of superannuation funds during the GFC.

Balanced investment options have about half of their money invested in Australian and international shares. The performance of shares swamps the returns from any other asset classes.

Australian shares have produced a total return of more than 20 per cent over the past 12 months. And international shares have returned almost 30 per cent over the same period. SuperRating's data shows the median-performing balanced fund returned just under 17 per cent for the 12 months to October 31.

Aon MT - Balanced Growth - Active is top performer for the year, with a return of 20.1 per cent. The big industry fund, REST Core Strategy, is in second spot with a return of 19.7 per cent and the Telstra Super Corp Plus - Balanced, for Telstra employees, former employees and their families, is in third place with a return of 19.2 per cent.

Superannuation is the ultimate long-term investment and only so much attention should be given to 12-month returns. Over the past seven years to October 31, the top spot among the balanced option is taken by REST with an average annualised return of 6.2 per cent. Second spot is taken by the Commonwealth Bank Group Super - Mix 70, for the bank's employees, former employees and their families, with a return of 6.1 per cent. Industry fund CareSuper - Balanced is in third place with 5.5 per cent.

Of the Australian shares options listed on SuperRating's database, line honours over seven years is shared by Hostplus and REST with an average annualised return of 6.7 per cent.

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