Breaking the Silicon Valley Stranglehold

The recent financial year, ending 30 June 2025, was marked by a significant shift away from the dominance of Silicon Valley tech in driving superannuation fund returns. Instead, a more diversified growth profile across asset classes helped both retail and industry super funds deliver resilient results despite geopolitical instability and concerns around inflation persistence.

• Domestic equities, infrastructure, and global markets beyond the US all contributed meaningfully to performance.
• Strong returns in listed equities were recorded in all major markets, and unlisted assets also contributed.
• Australian equities and domestic infrastructure were two of the biggest drivers of outperformance.

A Diversified Growth Profile

In contrast to previous years, which have been dominated by US tech, the past year saw a broader uplift across asset classes. This shift towards a more diversified growth profile helped both retail and industry super funds deliver resilient results.

“Solid returns in listed equities were recorded in all major markets, and unlisted assets also contributed,”

UniSuper chief investment officer John Pearce explained. “In contrast to previous years, which have been dominated by US tech, the strong performance was much broader.”

Domestic Exposure

Australian Retirement Trust’s head of investment strategy, Andrew Fisher, highlighted the return to home-ground advantage in the most recent financial year. “Australian equities and domestic infrastructure were two of the biggest drives of that relative outperformance,” Fisher shared.

Infrastructure: A Standout Contributor

Data centres, airports, and renewable energy assets featured prominently in commentary from chief investment officers, reflecting both strong returns and exposure to long-term structural themes.

Global Equities: A Key Driver

Global equities were a significant driver of returns in 2024-25, with AI and technology investments continuing a three-year trend of boosting equity markets. “Global and domestic equities were significant drivers of returns,”

said Mark Delaney, AustralianSuper’s chief investment officer. “We maintained our diversified portfolio while also capitalising on good growth in share markets.”

Active Asset Allocation

Retail funds also had a strong year, with AMP attributing its outperformance to a well-timed tilt toward US equities.

• AMP had a tactical overweight to US equities, which saw strong returns as their funds continued to outperform their benchmarks.
• The approach was further supported by positive active asset allocation and strong security selection by underlying managers.
• The surge in AI adoption across both US and global markets further supported this approach.

Challenges Ahead

Despite the back-to-back strong years, funds are preparing for more muted returns ahead. “Interest rates remain relatively attractive and bond yields look quite good relative to interest rates,”

said Andrew Fisher, ART’s chief investment officer. “Equities look reasonably good other than a few overpriced stocks and a bit of concentration in some markets. We’re also confident that unlisted assets will generate strong yields.”

However, AMP’s chief economist Shane Oliver highlighted several risks that could test market resilience, including the escalation of US tariffs. Escalating US Tariffs: A Concern

“The escalation of US tariffs has gained momentum in recent days,”

Oliver said. “This could have a significant impact on global markets and test the resilience of investors.”

Optimism and Caution

Despite the concerns, funds are entering the new financial year with a positive outlook. “We’re going into this new financial year relatively optimistic,”

said Andrew Fisher. “We’re confident that we can achieve at least an 8 per cent return for next year.”

However, Shane Oliver expressed caution, highlighting the need for investors to be prepared for more muted returns ahead. “Returns to come in around 6-7 per cent over the next 12 months,”

he said. “We need to be prepared for a range of scenarios and uncertainties.”

Key Takeaways

• Superannuation funds delivered resilient results despite geopolitical instability and concerns around inflation persistence.
• A diversified growth profile across asset classes helped both retail and industry super funds deliver strong returns.
• Infrastructure and alternatives shone, with data centres, airports, and renewable energy assets featuring prominently.
• Global equities were a key driver of returns, with AI and technology investments continuing a three-year trend of boosting equity markets.
• Challenges ahead include escalating US tariffs, which could test market resilience.

Frequently Asked Questions

1. What drove the strong returns in superannuation funds in the recent financial year?
2. How did infrastructure and alternatives contribute to superannuation fund performance?
3. What are the challenges ahead for superannuation funds?
4. What is the expected return on investment for superannuation funds in the next financial year?

Related Articles

• Superannuation Funds: A Guide to Understanding Investment Options
• The Importance of Diversification in Superannuation Investing
• Understanding the Role of Infrastructure in Superannuation Investing

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