The year ending 30 June 2022 was challenging for financial markets, with significant global and domestic volatility. As expected, our investment portfolios were subject to global market pressures, with most of our investment options posting negative returns for the period. While negative performance can be unsettling, it is essential to remember that super is a long-term investment, and performance should be assessed accordingly.

The AvSuper Growth (MySuper) option provided a return of -4.13% in FY2022 net of investment fees and taxes. Over 10 years members in this option have seen their super increase by a compound average of 8.09% each year. So $100,000 invested 10 years ago is now worth more than $217,000. Read more about the AvSuper Growth (MySuper) option here.

The table below shows weak or negative returns across most options for the last 12 months, with better results over 10 years. In fact, all options aside from the cash option have significantly outperformed their respective investment objective over 10 years.

10 years -
Annualised
7 years -
Annualised
5 years -
Annualised
1 year
Net returns
(%)
Net returns
(%)
Net returns
(%)
Net returns
(%)
AvSuper Options - Accumulation
Cash Option 1.82 1.42 1.28 0.57
Bloomberg AusBond Bank Bill Index 1.92 1.48 1.34 0.10
Stable Option 5.95 4.63 4.38 -1.74
Australian CPI + 1.5% 4.35 4.14 4.15 6.00
Conservative Growth Option 4.26 3.24 3.05 -2.73
Australian CPI + 0.5% 3.32 3.10 3.11 4.93
Balanced Growth Option N/A N/A 0.00 -3.62
Australian CPI + 2.5% 0.00 0.00 0.00 6.98
Diversified Index Option N/A N/A N/A -5.80
Australian CPI + 2.5% 0.00 0.00 0.00 6.98
Growth Option 8.09 6.27 5.95 -4.13
Australian CPI + 3% 6.20 5.90 5.86 7.59
High Growth Option 9.42 6.87 6.35 -9.21
Australian CPI + 3.5% 7.10 6.83 6.81 8.26
Australian Shares Option 9.19 6.14 6.25 -6.32
S&P / ASX 300 7.52 7.23 7.19 -6.78
International Shares Option 9.26 6.73 5.69 -15.24
33% MSCI ACW Ex Aust UH + 67% MSCI ACW Ex Aust H 8.66 8.65 8.81 -11.32

N/A – Balanced Growth Inception 2015 and Diversified Index Inception 2019

Source: BNP Paribas and AvSuper.  All returns are net of investment fees and taxes for Accumulation investors only.

The last 12 months in more detail

It has been a tough environment for investment returns with a combination of high inflation, high interest rates and volatile equity markets.

International shares have been hardest hit by this market turbulence. In FY21, the median international manager returned 29.3*%, but in FY22, the median was -8*%, demonstrating the volatility of  international shares.

Unfortunately, more defensive options such as Conservative Growth also suffered, with share market volatility on one side and bond markets falling more than 5% during the year on the other side. This is an unusual situation as generally bonds do better when markets fall. However, rising inflation across the globe has negatively impacted bond returns. As a result, the Conservative Growth option returned -2.73% in FY22, although it still returned 4.26% (annualised) for the last 10 years, against its investment objective of 3.32%.

How often should I expect my super to go backwards?

We expect the Growth Option to go backwards in 4-6 years out of every 20, and that’s exactly what’s happened as you can see in the graph below.

Source: BNP Paribas, AvSuper.  All returns quoted are net of investment fees and taxes.

There are different expectations for each investment option. At the most risk averse end, we expect the Cash option to go backwards less than 1 in every 40 years. And for our highest risk options (international Shares, Australian Shares, High Growth), we expect negative returns in 6 or more years out of every 20. The Standard Risk Measure (SRM) for each investment option provides an estimate of the number of negative annual returns possible over any 20-year period. It enables the comparison of  options to ensure members are comfortable with the risks of negative investment earnings for their preferred option.

Read the details for each option here.

If you’re not sure whether you’re in the right investment option for your particular circumstances, we encourage you to speak with your financial adviser.

*Source: Frontier Advisors, eVestment, Frontier cleansed universe of Active global equity managers, gross of fees, AUD.

Note: The AvSuper Growth (MySuper) option was assessed as underperforming in the 2021 YFYS Annual Performance Assessment (APA). Click here to read more.