Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Small funds top 2023 calendar year returns
The median growth product returned 9.9 per cent for calendar 2023, according to the latest data from Chant West. The robust result is mostly attributable to strong share markets, with the best performing growth products (which Chant West defines as having an allocation of 61-80 per cent growth assets) unsurprisingly those with some of the highest (circa 80 per cent) allocations to growth assets.
“With share markets performing so well in 2023, the better performing funds over the year were generally those that had higher allocations to shares, particularly international shares,” said Chant West senior investment researcher Mano Mohankumar. “Bonds were back in positive territory over the year with Australian bonds and international bonds up 5.1 per cent and 5.3 per cent, respectively. Cash, benefitting from the higher interest rate environment, returned 3.9 per cent.”
Chant West is still in the process of collecting final returns for unlisted asset classes, but infrastructure and private equity delivered positive returns while unlisted property finished in negative territory off the back of markdowns in the office sector. Listed real assets were mixed, with domestic and international listed property up 16.9 per cent and 7.9 per cent respectively; international listed infrastructure was flat. Mohankumar said the overall result was “a reward for those fund members who have remained patient and maintained a long-term focus”.
“That patience has certainly been tested at various points over the past four years, a period over which super funds’ investment portfolios have proven their resilience and robustness. They’ve shown their ability to limit the damage during periods of share market weakness, as we saw during the COVID crisis in early 2020 and again in 2022 when we saw rapidly rising inflation combatted by central banks aggressively hiking interest rates.
“At the same time, they’re able to still capture a meaningful proportion of the upswing when markets perform strongly, as we saw this past year.”
The top performing funds for calendar 2023 were:
1. Mine Super Growth (11.8 per cent)
2. Vision Super Balanced Growth (11.7 per cent)
3. IOOF Balanced Investor Trust (11.2 per cent)
4. Aware Super Balanced (11.0)
5. TWUSuper Balanced (10.6)
6. HESTA Balanced Growth (10.5)
7. Brighter Super MySuper (10.4)
8. UniSuper Balanced (10.3)
9. Prime Super MySuper (10.3)
10. Australian Retirement Trust – Super Savings Balanced (10.2)
Over the longer term, big and megafunds still reign supreme. The top 10 over 10 years are:
1. Hostplus Balanced (8.3 per cent)
2. AustralianSuper Balanced (8.0)
3. ART Super Savings Balanced (7.9 per cent)
4. UniSuper Balanced (7.7 per cent)
5. Cbus Growth (7.6 per cent)
6. Vision Super Balanced Growth (7.5 per cent)
7. CareSuper Balanced (7.5 per cent)
8. HESTA Balanced Growth (7.4 per cent)
9. Spirit Super Balanced (7.4 per cent)
10. AustralianEthical Super Balanced (7.3 per cent)
