Four superannuation funds released the investment returns for their default options this week for the financial year ended June 30, revealing mostly high single-digit returns.
One exception was the Australian Retirement Trust, Brisbane, whose Super Savings Balanced option delivered a 10% return. ART has A$240 billion ($160.2 billion) in assets.
Superannuation funds' default options are typically balanced, multiasset portfolios that are indicative of the fund's overall performance.
Cbus Super, Melbourne, reported a 9% return for the financial year largely driven by equities, said newly appointed chief investment officer Brett Chatfield in an email.
"We saw strong alpha in both our Australian equities and emerging market equities sectors, which added further return beyond the benchmark returns," he said. "In addition to equities, our global credit sector performed well as did our infrastructure portfolio."
Mr. Chatfield acknowledged that the real estate sector has had headwinds, but the "high quality and diversified nature of our property portfolio has limited the impact on overall portfolio returns."
Cbus, which has A$85 billion in assets, has had material write-downs across its total real estate portfolio, "including annual capital declines exceeding 10%, particularly in regard to office assets," he said.
"The office sector is experiencing weaker underlying tenant demand due to work from home trend, however, we believe that tenants will seek better quality space going forward to attract and retain staff," Mr. Chatfield said.
The superannuation fund's office exposure is largely in Australia, which has helped it avoid the deeper cut in valuation in other property markets such as the U.S., he added.
"Our focus for many years has been on building a diverse and high quality property portfolio to provide ballast during times like these," Mr. Chatfield said. "We are slightly underweight on office compared to the industry index and we hold predominately high quality assets with secure income."
AustralianSuper, Melbourne, which has A$300 billion in assets, on Wednesday posted an 8.2% return for its Balanced investment option for the financial year, largely due to the equity markets as well.
"The recovery in returns has been driven by strong growth in equity markets globally, with the performance of the technology sector a key driver," said AustralianSuper CIO Mark Delaney, in a statement. "Overall, investment market returns have been better than we expected and economic growth has proved relatively resilient with consumer spending holding up well over the year."
Similarly, the A$72 billion Health Employees Superannuation Trust Australia, Melbourne, also on Wednesday posted a 9.6% return for the financial year for its default Balanced Growth option — above its 10-year annualized return of 8%.
Generally, the super funds cautioned that significant challenges remain for the current financial year amid fears of a global recession, uncertainty in market conditions and geopolitical risk.
HESTA CIO Sonya Sawtell-Rickson said in a statement that the investment team is ready to respond to a range of market conditions that may emerge in the coming year.
To manage such risks, Cbus has taken a cautious approach, Mr. Chatfield said. "Our overall portfolio continues to be positioned defensively with an underweight equities position. … We have elevated cash levels currently and are well positioned to take advantage of opportunities as the environment evolves."
"We continue to selectively assess infrastructure opportunities and are also cautiously adding to private debt exposures," he added.
