International equities contributed the majority of the positive performance, although almost all asset categories ended in positive territory.
Even with the Australian dollar strengthening relative to most major currencies, unhedged global shares still achieved a 17% return, according to Mohankumar.
In an interview, Greg Clerk, Deputy CIO of Hostplus, remarked, "But we very much chose to be more diversified than just pure listed equity exposures." Clerk added that Hostplus chose a diversified approach. The fund's balanced option ranked fourth with a 10.8% return.
These results highlight the increasing dependence of Australian superannuation funds on international stock markets. According to Chant West, a standard growth fund allocates approximately 31% of its portfolio to overseas equities. Domestic equities, representing an average 24% of holdings, delivered a relatively modest 6.2% return for the year.
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The Australian superannuation system is the fastest-expanding retirement savings pool globally; about half its assets are invested overseas, and roughly one‑fifth are in private markets.
Chant West is still collecting full-year data on unlisted property, infrastructure, and private equity. Infrastructure is anticipated to have delivered returns in the 7% to 9% range, while private equity is estimated at 8% to 11%, according to Mohankumar. Unlisted property sustained its recovery and is expected to have returned 5% to 7%, Mohankumar added.
The strong performance of international shares, particularly in technology and AI‑related sectors, offset weaker local returns. Currency hedging played a significant role, as unhedged returns were notably lower due to the Australian dollar's appreciation.
The significant difference between hedged and unhedged international returns underscores the importance of currency management. With the Australian dollar strengthening against the US dollar and other major currencies, unhedged returns were cut by nearly a third. Fund strategies that actively hedge currency exposure can therefore add substantial value, though they also introduce costs and the risk of betting against the dollar's movement.
The heavy tilt toward international equities means members are increasingly exposed to global economic cycles, but as this year shows, that exposure can pay off handsomely when overseas markets rally.
These results also reflect a broader structural shift in Australian retirement savings. With the A$4.4 trillion ($3.1 trillion) pool continuing to expand rapidly, even modest annual gains translate into meaningful increases in account balances for millions of workers. The sustained outperformance of international equities underscores a fundamental shift in Australian retirement savings.
Funds increasingly seek growth beyond domestic markets, and this global exposure - while introducing currency and geopolitical risks - has proven beneficial in years like this one where overseas technology and AI sectors surged. The trend towards private-market investments further diversifies portfolios, though returns in those areas can lag during equity booms.
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