Australia’s superannuation sector experienced a mixed performance over the 12 months ending June 30, with some funds delivering strong double-digit returns while others recorded losses that left members with negative growth.
Among the largest funds, Hesta, managing approximately A$100 billion, reported a 3.3 percent return for its sustainable growth option, trailing both the prevailing cash rate—between 3.6 and 4.35 percent during the period—and the inflation rate of around 4 percent. To put this in perspective, a member holding A$150,000 at the start of the financial year would have seen their balance increase by less than A$5,000 over the year, excluding additional contributions.
Over longer time horizons, Hesta’s sustainability-focused funds have shown better resilience. The sustainable growth option averaged an annual return of 8 percent over a decade. However, the fund’s five-year performance dropped to an average annual return of 4.5 percent, illustrating the impact of recent underperformance on medium-term outcomes.
Hesta attributed the modest returns to increased diversification within the sustainable growth portfolio, aimed at managing risk and enhancing resilience amid volatile market conditions. Notably, Hesta’s green investment option recorded the lowest performance among the megafunds.
Other ethical or sustainable funds also struggled. Australian Ethical’s Australian shares option posted a negative return of 6 percent for the year, failing to deliver any positive growth over the period. Its top holdings included Westpac, National Australia Bank (NAB), CSL, Macquarie Group, and New Zealand’s Contact Energy. Of these, only Macquarie contributed notable gains. CSL’s shares, by contrast, declined by more than 50 percent during the year, erasing approximately A$60 billion in market capitalization.
Despite a challenging year domestically, Australia’s share market still returned about 6 percent including dividends, though this was significantly below the performance of global markets.
Other sustainable investment options demonstrated more positive results. Australian Ethical’s balanced and growth strategies generated returns of 6 percent and 6.5 percent respectively. Meanwhile, sustainable options offered by large superannuation funds such as AustralianSuper, Australian Retirement Trust, Aware Super, Hostplus, and Rest posted returns between 8 and 9 percent over the same period.
Overall, the results illustrate varying outcomes in the superannuation sector as funds navigate inflationary pressures, market downturns, and increased investor demand for ethical and sustainable investment options. For members, the performance differences highlight the importance of reviewing fund strategies and long-term track records when selecting super funds.