Super Nation is a fortnightly column that examines, explains and analyses key issues in one of Australia's largest, fastest-growing and most important industries: superannuation.
It may not quite be a revolution but the performance narrative should be starting to change in the superannuation industry.
Once it was taken as read that large profit-to-member super funds delivered higher returns with lower fees, leaving retail and smaller funds in their wake.
It was a perception backed by facts from independent sources like the Australian Prudential Regulation Authority (APRA) and Australian Taxation Office (ATO).
Industry funds leveraged this with the high-profile Compare the Pair campaign launched by Industry Super Australia in 2005 showing how much better off their members were in retirement than account holders in shareholder-owned retail funds.
Not helping the reputations of for-profit funds, those whose trustees are owned by publicly-listed or private companies, was that some were hauled over the coals in the Banking Royal Commission, none more so than AMP (ASX:AMP), a pioneer in the world of retirement products and employer-sponsored super before it was mandatory.
But it was not alone with Commonwealth Bank of Australia-owned (ASX: CBA) CFS (Colonial First State) and Insignia Financial’s (ASX: IFL) MLC Super (then owned by National Australia Bank) among those adversely mentioned.
However performance statistics for the 12 months to 30 June show that the worm may be starting to change with some retail funds outperforming industry funds.
SuperRatings Insights Manager Joshua Lowen said he expected competition between the industry and retail funds to increase because retail funds had performed more strongly over the last three years than previously.
“They’re going to be more competitive across performance and fees than they were and those two (factors) will have an impact on the amount of money going into that sector,” he said.
Shouting from rooftop
Rather than hide their performance lights under bushels some retail funds have been proud to promote their 2025 financial year (FY25) achievements.
Quick out of the blocks in the first two days of July were two of Australia’s largest retail funds as AMP’s AMP Super, with $116 billion under management, and MLC Super ($88 billion) announced they had delivered double digit returns in the 12 months to 30 June.
The MLC High Growth investment option returned 11.4% in FY25 and 11.4% per year over the last five years while the MLC MySuper Growth option delivered 10.1% and 9.2% respectively.
AMP’s MySuper 1960s, 1970s, 1980s and 1990s options achieved returns of 10.1%, 12.7%, 12.9% and 12.8% respectively for FY25 and 7.1%, 9.7%, 10.2% and 10.1% over five years.
Not far behind with news of double-digit returns in the retail fund space were $116 billion fund CFS and Mercer Super, the $74 billion fund managed by Marsh & McLennan’s (NYSE: MMC) global consulting subsidiary Mercer.
CFS delivered 12.80% from its FirstChoice Employer Super Growth Option (Lifestage 1975–79) and 11.36% from the Balanced (Lifestage 1965–69) option over one year and 12.93% and 11.33% respectively over three years.
Mercer Super produced one-year returns of between 12.3% and 12.6% and five-year returns of 9.7%-10.3% from its Mercer SmartPath default option for members aged between 18 and 52.
The best performing super fund over one and five years was little-known Raiz Invest Super which produced the highest returns among balanced passive options over one and five years of 13.8% and 8.9% respectively, according to research firm SuperRatings.
The $1.7 billion fund, owned by Raiz Invest (ASX: RZI), invests in exchange traded funds (ETFs) rather than employing fund managers on high salaries or outsourcing to third parties who do the same.
Vanguard, with $1.4 billion under management in Australia, reported an 11.8% return from its Super SaveSmart – Growth option over one year, the longest period for which performance was quoted because it only entered the Australian market in 2022.
Other retail funds ranked highly by SuperRatings were $3 billion Living Super, which returned 11.7% over one year and 6.8% over 10 years, and $143 million Superhero Super (11.7% and 7.2% respectively), both from their Growth options.
Living Super and Superhero Super share the same responsible superannuation entity (trustee): the privately-owned Diversa Trustees.
“It’s pleasing to see a range of funds in this year’s top performers with some smaller funds showing their ability to deliver strong returns to their members through uncertain times,” SuperRatings Director Kirby Rappell said in a media release.
Close but no cigar
Although some industry funds continue to rank highly in research firms SuperRatings’ and Chant West’s league tables, with a few exceptions their returns have lagged the best performing retail funds by one to two percentage points over one year.
The best one- and 10-year returns published by SuperRatings included the following industry funds:
- 12.6% and 7.3% for $6 billion LegalSuper’s MySuper Balanced option
- 12.0% and 7.8% for $126 billion Hostplus’ Indexed Balanced
- 11.3% (one year) for $37 billion ESSuper’s Balanced Growth
- 11.2% and 8.2% for $321 billion Australian Retirement Trust’s Super Savings Balanced; and
- 11.2% and 7.1% for $15.6 billion NGS Super’s Diversified (MySuper).
The best one year returns from industry funds published by Chant West included:
- 11% from $147 billion UniSuper’s Growth option
- 10.9% from $195 billion Aware Super’s Balanced, and
- 10.9% from $34 billion Brighter Super‘s MySuper.
The best 10 year returns published by Chant West included:
- 8.3% from Hostplus’ Balanced option
- 8% from $365 billion Australian Super’s Balanced
- 7.9% from UniSuper’s Balanced
- 7.7% from $97 billion Cbus’ Growth
- 7.7% from $12 billion Vision Super’s Balanced
- 7.6% from Aware Super’s Balanced, and
- 7.4% from $56 billion Care Super’s Balanced.
