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.
‘Time in the market, not timing the market’.
The phase widely attributed to legendary Fidelity Magellan Fund manager Peter Lynch means it is better to stay invested in the market rather than try to pick when to buy or sell.
It was also quoted by some of Australia’s most senior investment professionals when asked by Azzet about the outlook for returns.
Funds have reported their performance for the 2025 financial year (FY25) and are looking forward to the current year.
A survey of the major funds and research houses has identified key themes for FY26:
- Returns will be lower than in the last few years
- They will also be more volatile, and
- Members should invest for the long term.
This comes against a backdrop of strong results for the last three years, with some funds boasting of double digits in FY25.
The median balanced option returned 10.1% in the 12 months ending 30 June, compared with 8.8% in FY24 and 8.5% in FY23, according to SuperRatings.
“However, expectations that similar returns will continue in the coming years should be tempered with markets currently sitting at record highs,” SuperRatings Executive Director Kirby Rappell said Rappell said in a media release.
Chant West Head of Superannuation Investment Mano Mohankumar said three years of 9%+ returns should not considered normal.
“After delivering three consecutive years of double-digit returns to the majority of our members, we anticipate more moderate investment returns in 2025/26,” Mercer Super Chief Investment Officer Graeme Miller told Azzet.
AMP Chief Economist and Head of Investment Strategy Shane Oliver said after three years of 9-10% returns, balanced growth super funds were more likely to deliver a more sustainable 6-7%, particularly as share valuations were high.
“I think it’s going to be a little more constrained. it's unusual to have this continuing indefinitely,” Oliver told Azzet.
He said share market volatility was likely to remain high given tariff uncertainties, concerns about U.S. debt, geopolitical threats and likely weaker growth and profits.
Cbus Super Chief Investment Officer Leigh Gavin said U.S. tariff policy and global instability continued to be major themes for investors.
“The range of possible returns in the US has never been wider. That doesn’t necessarily mean lower returns, but it does likely mean a wider range of plausible outcomes,” Galvin said.
“As the events of FY25 have demonstrated, in your accumulation phase it’s about ‘time in’ the market rather than ‘timing the market’.”
Morningstar Principal Superannuation Research William Anglingdarma said equity market performance was a major driver of super fund returns, with typical growth funds allocating around 55% to listed equities.
“Given current share market valuations, the strong returns seen in recent years, and ongoing global uncertainty, it seems unlikely that FY26 will deliver a repeat of FY25’s strong performance,” Anglingdarma told Azzet.
HESTA Chief Investment Officer Sonya Sawtell-Rickson said management of the risks associated with United States policy announcements and the Middle East conflict remained a focus.
“While volatility has eased after a surge in March and April, geopolitical events remain an important consideration as we head into the new financial year,” Sawtell-Rickson said.
REST Super Interim co-Chief Investment Officer Kiran Singh said: “We still think that markets may trend higher from here but with higher levels of volatility than seen in the previous decade. We remain fully committed in equities at this point.”
Australia’s second-largest superannuation fund, Australian Retirement Trust, expects returns of between 6% and 10% in FY26, according to the Head of Investment Strategy, Andrew Fisher.
“That doesn't mean it's (FY26) going to be a super compelling, exciting year, but the historical 8%, with a six to 10% range type of expected return scenario, doesn't seem unreasonable to us looking forward,” he said in an interview.
UniSuper Chief Investment Officer John Pearce said the market retained a positive tone with inflation and interest rates falling and profits rising.
“However, there are some dark clouds on the horizon, and in particular the impact of tariffs are starting to work through the system, and we expect the next few months are going to be quite telling,” Pearce said in a video.
“There's a wise old adage that time in the market is better than timing the market. It's an oldie but a goodie.”
Aware Super Head of Investment Strategy Michael Winchester said the double-digit returns most of the $195 billion fund’s members received for three years tracked well above the long-term average.
“While we can’t predict market outcomes, we do anticipate returns will likely moderate over the coming year, “ Winchester said in a statement to Azzet.
