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In this article you can discover the top 10 performing Conservative pension funds over 1 year and 10 years. We recommend that you also read our explanatory article Introduction to SuperGuide’s top 10 performing super fund lists which can help you understand how to compare the different risk categories that super investment options sit within.
What is an Conservative investment option?
Investment options with a 21–40% allocation to growth assets are termed Conservative by Chant West, a research company that has been analysing super fund performance for more than 20 years.
Conservative investment options may appeal to people who want a significant portion of their money in defensive assets for greater certainty.
Note: Investments such as shares, property, infrastructure and private equity are referred to as growth assets for their ability to produce strong returns over the long term, but they are more likely to experience volatility (and even negative returns) in shorter timeframes. Conversely, assets like cash and fixed interest are referred to as defensive assets for their ability to defend against volatility, but generally cannot produce high returns over long periods of time.
How does a Conservative investment option behave?
In the short term, investment options in the Conservative risk category will generally experience the least volatility of all diversified investment options across all risk categories.
In the long term, a Conservative-style investment option will generally enjoy more certainty but should not be expected to grow as much as investment options in other risk categories with greater exposure to growth assets.
Top 10 Conservative investment options (pension funds): 1 year to June 2020
| Super fund | Investment option | Return |
|---|---|---|
| CSCri | Income Focused | 4.4% |
| Suncorp | Multi-Manager Conservative | 3.6% |
| Cbus | Conservative | 3.2% |
| Australian Ethical | Conservative | 3.1% |
| VISSF | Conservative | 3.1% |
| Vision Super | Conservative | 2.6% |
| Australian Catholic Super & Retirement | Conservative | 2.3% |
| HESTA | Conservative | 2.3% |
| HESTA | Defensive | 2.1% |
| UniSuper | Capital Stable | 2.0% |
Source: Chant West. The top 10 is limited to Conservative options with assets of $1 billion or more. Performance is shown net of investment fees and tax, and before administration and adviser commissions.
- Pension fund rankings: All Growth category (96–100%)
- Pension fund rankings: High Growth category (81–95%)
- Pension fund rankings: Growth category (61–80%)
- Pension fund rankings: Balanced category (41–60%)
- Pension fund rankings: Conservative category (21–40%)
2019/20 was a challenging financial year for superannuation and the global economy in general, and the median 1 year return for Conservative investment options across the board was 1.2%. (Median returns track the mid-point of all contenders in any one category and are good way to add context to what you’re looking at. You can see the median returns of all risk categories over a broad range of timeframes here).
Playing the long game
It’s important to keep an eye on how your pension is performing for you year to year (and interesting to see how other funds have performed), but for most people, superannuation will be the longest-held investment we ever have, and our lens on super should reflect that.
Longer-term figures are more significant because they incorporate the ups and downs over that entire period, and allow us to see which investment managers can consistently deliver superior performance, regardless of changing external conditions.
Top 10 Conservative investment options (pension funds): 10 years to June 2020
| Super fund | Investment option | Return (% per yr) |
|---|---|---|
| Catholic Super | Moderately Conservative | 7.5% |
| VISSF | Conservative | 7.3% |
| AustralianSuper | Stable | 7.3% |
| TelstraSuper | Conservative | 7.0% |
| UniSuper | Capital Stable | 7.0% |
| Prime Super | Conservative | 6.8% |
| Cbus | Conservative | 6.7% |
| Vision Super | Conservative | 6.7% |
| Aon smartMonday | Moderate | 6.6% |
| CareSuper | Capital Stable | 6.6% |
Source: Chant West. The top 10 is limited to Conservative options with assets of $1 billion or more. Performance is shown net of investment fees and tax, and before administration and adviser commissions.
Again median figures can provide good context. In the ten-year period to June 2020, Conservative investment options as a category delivered a median return of 6.4%.
A small difference in performance makes a big difference over time
Although the difference between the top performer and the median may not seem that significant (1.1% per year), the difference builds up significantly over time due to compounding. We have developed the SuperGuide Super fees and returns calculator to help readers understand the difference the fees they pay and projected returns may make over time.
For example, for a 67-year-old with $500,000 in super achieving 7.5% per year, their super balance would grow to approximately $928,745 by age 85 (assuming 0.8% in fees and not withdrawing any super) .
All other things being equal, achieving 7.3% instead would mean a super balance of approximately $766,248 – a difference of $162497, or approximately 17% less.
But don’t forget sequencing risk
When you are nearing or in retirement it is important to allow for sequencing risk, particularly if you need to draw down a significant part of your super balance. Learn more in SuperGuide article 5 ways sequencing risk affects your retirement.