Written by:
Future Group
5 July 2024
Future Super’s Balanced Index option has delivered robust returns over the past 12 months at 10.1%, while Verve Super returned 9.9%. Sustainable investment screening provided a performance boost for both products this year.
SuperRatings estimated that the median balanced super fund would return 8.8% for the financial year, up from 8.5% last year.
Verve Super and Future Super employ a negative screening approach - screening out fossil fuel companies as well as gambling, tobacco and weapons companies. This year, the screening approach has helped position Future Super and Verve Super as leaders in responsible investment returns.
Future Group Executive Director of Investments Sharon Davis said: “Our returns are built on a foundation of responsible investing, avoiding fossil fuel companies means we have more space to embrace other, growing sectors like tech, AI, health and renewable energy. Locally, the fossil fuel sector was not a strong performer this year, while globally the technology sector, benefitting from the AI boom, performed exceptionally well.”
The fossil fuel intensive energy sector in Australia (including companies like Woodside and Santos) underperformed the ASX300 this financial year, with the sector returning -1.0% while the ASX300 returned 11.9%.
This continues a long trend. Research from the Institute for Energy Economics and Financial Analysis shows that fossil fuel companies have been dragging down share markets for as long as 10 years (to the end of calendar year 2023).
As governments and companies meet net zero commitments, we expect that this global trend will continue over the long term. By screening out fossil fuels, Future Super and Verve Super members stand to benefit from the global movement towards decarbonisation.
“While politicians may equivocate from time to time on climate action, markets continue to take a long-term view on the inevitability of the transition away from fossil fuels,” said Sharon Davis.
Nvidia was one of the darlings of the AI trend, with its share price booming throughout the year. Future Super and Verve’s screening approach means that we allocate more than the benchmark to growth sectors like tech and companies like Nvidia, helping members benefit from the strong performance of the technology sector.
Meanwhile, energy stocks – a sector made up of many fossil fuel companies, which Future Super and Verve Super screens out – were a drag on performance for ASX investors. This year, our members benefited from not being invested in those companies.
Future Super and Verve Super’s impact investment philosophies see our members overweight private credit and clean energy infrastructure relative to traditional unlisted investments like commercial real estate.
“Our focus on impact investments is evident in our material exposure to private credit loans for solar farms and battery projects over unlisted property. Global investment in clean energy is at an all-time high, set to reach US$2 trillion this year. Our members are well-positioned to benefit from this global movement,” Davis said.
Future Super and Verve Super’s investment strategy maintains a limited exposure to commercial property, setting us apart from some traditional funds still stuck in outdated investment models. Our focus is on assets with high growth potential and sustainability impact.
Returns are not guaranteed and past performance is not a reliable indicator of future performance. All information is general in nature and does not take account of your personal objectives, financial situation or needs. Before deciding whether a particular product is appropriate for you, please read the relevant Product Disclosure Statement, Target Market Determination and Financial Services Guide available on the fund website, and consider speaking with a financial adviser.
