Top 10 Balanced super funds ranked by risk and return

While super is a long-term investment, short-term fluctuations in the value of your super account can set the pulse racing, and not in a good way. This is especially so for members close to or recently retired and those with a large account balance.

According to super fund ratings and analysis group SuperRatings, the market has behaved differently over the past year or two, with stronger than anticipated returns but more volatility along the way.

The year to June 2024 was a year of three parts. Concerns over inflation caused a slow start to the year with multiple negative returns until October 2023. Markets then rallied, led by US technology stocks and local banks as inflation eased and optimism over developments in artificial intelligence surged. After a blip in inflation caused markets to stumble in April, it was full steam ahead to finish the year on a strong note.

“For members nearing, or in, retirement, minimising these fluctuations can be a key factor in their retirement planning,” says SuperRatings executive director, Kirby Rappell. And super funds have responded.

“Managing volatility is a key function of superannuation funds, with the need to consider downside risk increasingly evident over recent years,” say Rappell. “While this has meant some funds that were more defensively positioned didn’t benefit as much from this year’s share rally, having strong diversification supports smoother returns over the long term.”

While younger investors can afford to take a long-term view, it’s still important to understand the risk and return trade-off along the way.

Taking account of volatility

For this reason, along with the usual lists of top funds rated by their investment returns over various time periods, SuperRatings also publishes the top 10 Balanced options over seven years, ranked by returns adjusted for risk (volatility).

Why does this matter?