Super funds, ordinary returns

I’m going to spoil my own piece a little here and answer that question right out of the gate.

No, super fund returns have not been good this past financial year. But please hear me when I say - they’re not bad, but that by itself doesn’t mean they’re good.

There are some quite simple answers as to why, and we’ll get to those, but importantly, it’s key to understand the difference between absolute return and relative return. And private client investing, superannuation included, is about nothing if not relative return. Let me explain.

The truth is that it doesn’t matter how or why or when, it only matters that you maximise relative risk-adjusted returns. The key is almost always asset allocation and in fact, it is commonly the most important decision that investors make. This is why Australian super returns aren’t good – because they have allocated assets inefficiently, particularly regarding relative risk-adjusted returns. Here, I’ll show you.

For the 12 months through 30 June 2026, the S&P 500 was up 22.3% and the Nasdaq 100 was up 34.4%. For the same period, the best Australian super fund growth options delivered:

Now, let’s take half of the equity exposure and make it global (which returned 23.9% for FY26), and the fully global blended return was 20.4%.

The point is, it’s much more than 12.3%. Much much more. And remember, those are the very best Aussie super funds – every other fund returned less than that.

That’s only one year though – given we’re talking about the ultimate long-term asset, superannuation, what if we go longer term?

Through 30 June 2026, the S&P 500 was up 14.4% per year for the last 15 years. For the Nasdaq 100, it’s 19.9%. For the same period, the best Australian super fund growth options delivered:

To put the long-term difference in returns into context, if you start with $100,000 and you invest for 20 years, these are the end balances at the different rates of return:

This is real money, that would make a real difference in anyone’s retirement.

The media keeps describing Australian superannuation returns as very strong. I’ve even seen that sentiment on this platform. The returns are not strong, they’re ordinary. Not bad, not good.

To be fair to these funds, they are hamstrung. They have the MySuper guidelines to adhere to, plus they have regulatory and Government eyes all over them, and never mind that one even slight mis-step, and the media will jump on at any chance they get. As much as this sounds silly given big super funds should act as the ultimate sophisticated investor, the truth is that they can’t take some of the rudimentary risks that “typical” growth investors would take. For the most part though, they’re forced by performance guidelines to stay pretty close to the benchmark.

But here’s the problem – these returns aren’t anywhere near any realistic benchmark.

So what’s an investor to do? The answer is quite simple, and apologies in advance that this may sound a little self-serving. If you’re a growth investor, and if you want exposure to the parts of the market that are growing in a way that aligns with a successful growth investor, you need to be able to directly control where your exposure is pointing. You need to be able to choose. You need to be able to tailor. And you need to be able to double-down on what you like, or avoid what you don’t like.

And if you yourself don’t have these answers (and here’s the bit that may sound self-serving), get an adviser to help you. If they’re good, they can tailor the portfolio and the strategy to combine with your income, your spending, your legacy goals, and your risk appetite, as well as what the rest of your balance sheet looks like.

Apart from the regulatory guidelines, that right there – the detailed tailoring to your exact financial life – that’s what big super funds can never do for you.

Now, I want to be very clear, very very clear. This is NOT personal financial advice. I know nothing about your personal situation, your finances, your income, your spending, your balance sheet, your health, your age, your risk profile, nothing. Please do not run out and do anything, anything at all, based solely on what you read here. This is as much a tax consideration as it is anything else so please, talk to your accountant and if you don’t currently have one on speed-dial, get one before you make this decision. It’s a big deal and you can’t do it because some schmuck on Livewire told you to.

Got it?? NOT PERSONAL FINANCIAL ADVICE. Please don’t act based on this piece, please get professional advice. Please.

All of that said, one way to be able to tailor your portfolio to your life is to set up a self-managed super fund (SMSF). That way, you can (probably) build exactly what you want. They’re not perfect and they won’t solve all of your retirement problems, but they’re very flexible.

Now there are limitations, to be sure. You need a minimum capital amount, there are legal and financial hurdles, there’s real admin, you have to arrange an audit, there are costs. But if you tick the required boxes, many people can derive significant benefit from a SMSF.

But do your homework – SMSFs aren’t for everyone.

That said, if you want to tailor your superannuation to your life, and you want better relative risk-adjusted returns, and you like the idea of playing an active role in how the result turns out, it’s worth a look.

To repeat - - you’ll need to consider the limitations noted above, and where necessary, you might need to hire a financial adviser to help you (you probably should, truthfully – apologies again for the self-serve), but there’s such a good chance that the end result will be better than a traditional super fund, or more tailored to you at least, it’s worth a look.

Good luck out there.