After five years of extreme performance volatility, the average Australian saw his retirement nest egg grow by 14.7% in the past financial year – the highest return since the global financial crisis, and the third best return since compulsory superannuation was introduced in 1992.

An analysis of the super fund sector by SuperRatings found that for the year to June 30, the country’s fund managers delivered a near record result for members. The 14.7% figure represents the median return of all balanced option funds, or default funds, in which about 70% of Australians have their super invested.

Kirby Rappell, SuperRatings’ research manager, says the biggest driver of performance was skyrocketing international and domestic equities. “The median Australian shares option retuned 21.1% for the financial year to June 30, compared closely to a 22.8% gain in the S&P/ASX200 index,” he says.

International stocks, meanwhile, performed even better, gaining more than 26% for fund holders. “The falling Australian dollar increased the value of fund’s overseas assets in Australian dollar terms,” says Rappell, noting a 7.5% drop in the currency since the start of the year.

Defensive assets such as cash and bonds lagged their growth peers. The average fixed-income fund returned just 4.7% for the year, while the average cash option returned a measly 2.9%, despite Australia enjoying a relatively high interest-rate environment versus developed nations.

“Australians will no doubt be pleased when they open their annual member statements this year,” says SuperRatings chairman Jeff Bresnahan. This is in stark contrast to the situation in 2009, when the average default fund dropped by 13%.

“Balanced options have now rebounded by 47%, so those members who decided to switch into cash during the depths of the financial crisis would have missed out on this significant turnaround,” says Bresnahan.

In reporting its results last month, the A$62 billion AustralianSuper fund warned investors not to become too focused on annual figures.

AustralianSuper’s balanced investment option returned 15.63% after fees and taxes for the year, but chief investment officer Mark Delaney said there had been “a lot of volatility” within that. “For most people, super is a long-term investment that needs a sensible long-term strategy, and part of that is accepting that returns will go up and down from year to year,” says Delaney.

The SuperRatings’ analysis lists the top five performing balanced funds as: StatewideSuper (returning 18.5%), Rest Industry Super’s core strategy (18.4%), Aon’s master trust (17.9%), Telstra Super’s balanced fund (16.9%) and Russell’s SuperSolution (also 16.9%).

Rest is Australia's largest super fund by membership, with over 1.8 million members, and its core strategy fund is also the top performing balanced fund over a five-year period, returning 6.1% per annum since 2008.

Looking at equity funds, BT Business Super’s global share fund gained 33.4%, while the top performing capital-stable fund – which SuperRatings classifies as holding less than 40% of assets in growth-style investments – was StatewideSuper’s conservative option, with a return of 13.1%.

Overall, says Rappell, the latest results are the third highest since the superannuation scheme was launched 21 years ago. The other top performances were 15.7% in 2006/2007 and 18% in 1996/1997.

The average return over the 21-year period is 7%, easily outpacing inflation and more than meeting funds’ long-term objectives.