Superannuation returns for 2024 top 11 per cent, despite sharp end-of-year retreat by ASX200

Another record-breaking year for Australian shares helped swell average retirement saving accounts by more than 11 per cent in 2024, despite the absence of an expected Santa rally. A sharp 0.9 per cent loss in a shortened trading session on Tuesday reined in the S&P-ASX200’s annual return to 7.5 per cent, down from the previous year’s 7.8 per cent gain after an unexpected loss-making December that stripped 3.3 per cent from the market. However, superannuation accounts likely returned at least 10 per cent for the past 12 months, boosted by investments in overseas equity markets that have run harder than Australia. With one day of trading left, the tech-heavy Nasdaq in the US was up 29.8 per cent for the year and the S&P500 had gained 23.8 per cent. Japan’s Nikkei wrapped up 2024 on Monday by crystallising a 19 per cent return and Hong Kong’s Hang Seng grew 17.7 per cent. Research house SuperRatings estimates the Australian median balanced super fund — one with between 60 per cent and 75 per cent of balances exposed to shares and other growth assets — returned 11.5 per cent for 2024. That’s well up on 2023’s 9.6 per cent gain and easily betters the average 6.7 per cent annual return since SuperRatings began keeping records in 2000. The “vast majority” of options were estimated to have returned more than 10 per cent, with the best funds seen gaining in excess of 12.5 per cent, SuperRatings said. “It has been a year of surprisingly strong and consistent positive returns for the industry where superannuation funds have strongly benefited from international share exposure,” executive director Kirby Rappell said. However, the group joined other pundits in warning of more volatility in 2025, despite expectations that the Australian market will hit more record highs as the Reserve Bank cuts interest rates and miners are boosted by likely additional Chinese stimulus. “Plenty of risks remain to be navigated over 2025. Most of this year’s returns have come from share markets, which are now priced at historical highs both in Australia and internationally,” Mr Rappell said. “A correction in share markets would have a strong flow-on effect to member’s superannuation balances and members should be prepared to see ups and downs over the short term.” The S&P-ASX200 finished Tuesday 75.9 points lower at 8159.1 — 355 points short of its record closing high of 8514.5 just four weeks ago. The broader all ordinaries index finished at 8420.5. Biggest ASX winners (and laggards) Tech stocks and the banks were the year’s biggest winners, with the tech index surging 49.5 per cent on the back of US-exposed stocks such as family app Life360. The financials sector gained 28 per cent, bolstered by buy now, pay later stock Zip Co and the big banks, notably Westpac (up 44 per cent) and Commonwealth Bank (37 per cent). Discretionary consumer stocks, led by JB Hi-Fi and newly-floated Mexican fast-foot outfit Guzman Y Gomez, also fared well, their sector adding 20 per cent. However, with the exception of gold stocks, the big-end resource sector bombed. Amid persistent concerns about China’s economy, the mining sub-index gave up 17.3 per cent, with former stars Liontown Resources (down 68.2 per cent), Mineral Resources (51 per cent) and IGO (47 per cent) among the biggest losers. The energy sector was the worst performer, dropping 18.8 per cent in 2024. Among the oil and gas heavyweights, Woodside Energy lost 21 per cent and Santos 12 per cent. Mixed bag for commodities Among key commodities, iron ore had its worst year since 2015, with Singapore futures finishing Tuesday at just over $US100 a tonne. The steel-making commodity couldn’t shrug off the worries about China’s sluggish economy, slumping from more than $US140/t in January to a two-year low of just $US91/t in September. Gold, on the other hand, hasn’t been better for two decades, outperforming most other commodities in a sparkling 12 months. As overseas markets opened late on Tuesday, the precious metal was about to record one of its best years in the 2000s, up 26 per cent at $US2605 an ounce. The Australian-dollar gold price has leapt 38 per cent, thanks to a forgettable 12 months by the local currency, which is languishing at near two-year lows at US62.1¢, influenced again by China and the sharp rise in the US dollar in the wake of Mr Trump’s victory. It began 2024 at just over US68¢. Crystal balling 2025 ... Most market strategists expect Australian shares to post further gains in 2025, boosted by lower inflation, better business confidence and relief for households from lower rate cuts from early to mid-year. However, they are also citing uncertainties around geopolitical risks, including the war in Ukraine, and US President-elect Donald Trump’s promised tariffs. AMP chief economist Shane Oliver is tipping the S&P-ASX200 to add a more constrained 7 per cent in 2025 to about 8800 points after a probable sharp drop somewhere during the year. “Stretched valuations after two strong years, the ongoing risk of recession, the likelihood of a global trade war and ongoing geopolitical issues will likely make for a volatile ride in 2025 with a 15 per cent correction somewhere along the way highly likely,” he said. “But with central banks still cutting rates, with the RBA expected to start cutting in the first half of 2025, and prospects for stronger growth later in the year supporting profits, shares should still see okay investment returns.”