Australian Retirement Trust delivers 11.3% in FY24

Australian Retirement Trust (ART) returned 11.3% p.a. for its High Growth option for the 2024 financial year.

ART head of investment strategy Andrew Fisher told Financial Standard that equities over the last two years have been "surprisingly resilient given the inflationary environment."

"We think of equities as inflation hedging assets. The average company should be able to pass through higher inflation to revenues. But what tends to happen, historically, is that this isn't a one-to-one type of relationship. So, the actual inflationary environment at times, equities are not necessarily the best [in the] short-term for inflation," he said.

"So that's something that I think's really been a positive surprise - is how well equities have held up the last couple of years."

About half of the super fund's equity allocation is split across passive and active strategies.

Meanwhile, the alternatives portfolio delivered "compelling returns" while real estate was the only detractor turning in negative returns for the period. Private debt's performance once again shone.

"What private debt managed to do well was deliver 8% to 10% returns consistently... On a risk adjusted basis, it's probably one of the positive standouts in the portfolio. The reason for that being private debt is a combination of floating rate positions plus spread. In an environment with no defaults and relatively attractive spreads and relatively high interest rates, it's not surprising that you're carrying high, single digit returns," he said.

Preliminary Chant West estimates show the median growth fund return for super funds in FY24 is at about 9%.

As of today, ART introduced changes to its lifecycle strategy, which affects how members' money is invested according to their age.

Those under 50 years old and were in the Default option, for example, will move into the High Growth option. Members will de-risk from High Growth towards Balanced from the age of 65 and beyond. The update is due to finalise on September 30.

Last year, the Balanced option delivered 10% p.a.

"For members under the age of 50 who don't make a choice, we will invest them into a MySuper investment strategy that is equivalent to the ART High Growth option," ART chief investment officer Ian Patrick said.

"This will mean over 1.4 million ART members will be transitioned into what has been our strongest performing strategy over the past 10 years."