Not one bank-run retail superannuation fund has made it into the "top 10" list of funds — whether it be across one or 10 years.
The top performers are all industry-run growth funds, according to the latest report from superannuation research house Chant West.
Industry super funds also outperformed retail funds across every time period.
In one month, industry funds returned 1.5 per cent, versus 1.1 per cent for retail funds.
Across three years industry funds returned 9.7 per cent per annum, compared to retail's 8.5 per cent.
Taking a longer term view, over 15 years industry funds returned 8.1 per cent per annum, while retail gained 7.2 per cent each year.
Performance by industry segment (results to 30 June 2018):
|1 month (pc)||Qtr (pc)||1 yr (pc)||3 yr (pc)||5 yr (pc)||7 yr (pc)||10 yr (pc)||15 yr (pc)|
Source: Chant West
Unlike industry funds, banks and insurance companies use their superannuation funds to generate corporate profits. These profits are returned as dividends to shareholders, rather than retained by superannuation policyholders.
The nation's largest banks run many of the big retail funds, such as BT Super (Westpac) and MLC (National Australia Bank).
Reasons for industry super outperforming retail funds
"Over the longer term, industry funds as a group have outperformed retail funds largely because of the way they have allocated their investments and their preparedness to vary those allocations to suit changing market conditions," Chant West senior investment manager Mano Mohankumar said.
"Specifically, they have always tended to have higher allocations to unlisted assets such as private equity, unlisted property and unlisted infrastructure (currently 21pc versus 5pc), which have performed well for them."
Industry funds have less invested in traditional asset classes, such as listed shares, real estate investment trusts (REITs) and bonds.
The report found that these investments have "slightly higher" costs, but tend to yield better results with lower volatility.
The top 10 growth funds in the last financial year include AustSafe, Statewide Super, AustralianSuper, Cbus and Sunsuper, all of which returned at least double-digit growth (10.5pc).
For the second consecutive year Hostplus was the best performing fund, up 12.5 per cent.
A growth fund is basically a diversified portfolio of assets with capital appreciation as its primary goal — generally regarded as "high-risk, high-reward", and not ideal for those not planning to retire soon.
Nine years of growth
In addition, for the ninth consecutive year since the global financial crisis, Australia's superannuation funds have yielded positive returns.
Even the worst-performing growth fund managed a 6.5 per cent return, well above the rate of inflation (2 per cent), according to Chant West.
Across the category, the median growth fund made a 9.2 per cent gain for its members in the 2017/18 financial year.
The last time there was a nine-year streak of super gains was between the 1992/93 and 2000/01 financial years.
"This year's 9.2 per cent is better than most experts, including ourselves, expected a year ago," Mr Mohankumar said.
"It's also well ahead of the typical long-term return objective for the growth category which is CPI [consumer price index] + 3.5 per cent.
"With inflation running at about 2 per cent, that translates to a target of about 5.5 per cent."
In addition, growth funds have consistently outperformed the 5.5 per cent target — except during the early 2000s (bursting tech bubble), and 2008-12 (fall-out from the global financial crisis).
Share market boosting super gains
It was also found that the better-performing super funds in the last financial year had higher allocations in listed shares and unlisted assets — property, infrastructure and private equity.
"While shares are still the main drivers of performance, major super funds are well diversified across a wide range of other sectors including unlisted assets," Mr Mohankumar said.
Traditional bonds and cash were among the bottom-performing asset classes.
Australian shares gained 13.2 per cent and outperformed foreign shares — which earned 10.8 per cent (hedged), and 15.5 per cent (unhedged) over the year.
Mr Mohankumar found shares to be a "remarkably resilient" asset despite the risks out there.
These include the US-China trade war, US-North Korea nuclear tensions and "continuing uncertainty" about the pace and timing of future interest rate increases.