How your super performed: Oct-Dec 2024

The final quarter of 2024 was marked by big shifts driven by political changes and economic policies. Here’s everything you need to know about your Future Super fund’s performance from October through December 2024.

Over the past 12 months, all investment options have yielded returns above 10%: Renewables Plus Growth delivered 11.77%, High Growth 12.27%, Balanced Impact 11.45% and Balanced Index made 13.06%, which landed this option in the Top 5 sustainable super funds of 2024*. You’ll find all the numbers down below.

ICYMI: here’s what's happened in the market in October-December 2024 and what's influenced the numbers. Remember, your super is a long-term investment and the way your super is invested is designed to withstand the ups and downs of markets.

Trump collides with markets

Donald Trump’s election to the White House was not great news for the climate (or for diversity & inclusion), but it also heightened market volatility. At first, his pro-business stance, including proposed tax cuts and deregulation, drove a market rally. Industries expecting to benefit included financials, small business, tech and even cryptocurrencies. However, companies that rely on government spending, such as healthcare, saw declines amid concerns about tariffs and policy uncertainty.

Despite the initial excitement, some gains had fizzled out by December as investors reassessed the sustainability of these economic plans. Big Tech mostly recovered from their November dip, but other sectors for the most part gave back some of their post-election winnings.

Soon after his inauguration, Trump’s imposition of punitive trade tariffs on the US’s closest trading partners Canada, Mexico and China, sent ripples across the global economy that may continue to play out for some time. The key takeaway? Market direction is uncertain, but investors will keep an eye on sectors poised to benefit from policy shifts, such as technology. Better news for the climate is that tech innovation is also driving a strong demand for renewables and energy efficiency to help secure the energy supply needed.

Predicting what Donald Trump might do next will be challenging, given his history of aggressive rhetoric and lesser action, but it's one of the most gripping stories of 2025, with significant market implications.   

Rate cuts – finally

While the US Federal Reserve has been adjusting interest rates in response to economic conditions, a strong job market makes inflation a concern. Global markets are sensing a change from the Fed, with other countries cutting rates to address their softening growth.

Here in Australia, inflation has fallen to within target levels. This happened more rapidly than the Reserve Bank of Australia (RBA) had expected, so with cautious optimism it decided to lower the cash rate in February, by 25 basis points to 4.10%.

This could impact everything from mortgage rates to stock market performance. Lower rates generally make borrowing cheaper, boosting spending and investment. The rate cut reflects a cautious sense of optimism about recent progress, while also highlighting the importance of keeping a close eye on global economic trends, domestic demand, and inflation patterns as they continue to assess potential risks to the economy. These include Trump’s trade war, which may contribute to a weakening Australian dollar due to our trade exposure to China.

Strong year, rollercoaster finish

 US tech (with everyone vibing AI innovation) helped fuel strong gains across the markets, but Future Super’s refusal to invest in fossil fuel companies also helped protect your super from another bad year for fossil fuel stocks and deliver returns above the market median of about 11%. However the Trump effect, combined with uncertainty over interest rates, fuelled volatility on the final quarter and triggered a sell-off at the end of the year.

In Australia, losses during the quarter were mainly due to a struggling materials sector, (looking at you, iron ore), which suffered from decreasing demand from China’s construction industry. Our small domestic tech sector also struggled to keep up with global shares, but Australian equities managed to achieve double digits returns.

In the bond market, both global and domestic bonds finished the year in negative, driven by conflicting economic signals. While the RBA’s initially cautious approach offered short-term market stability, the subsequent drop in unemployment then undermined this positive effect, pushing bond yields higher.

What’s in store for 2025

Overall, 2024 was a stellar year for Australian super, thanks to a combination of falling inflation, lower interest rates globally and surprisingly strong economic growth.

There’s no crystal ball, but looking ahead through 2025, all eyes are on the US economy. Trump is making sweeping changes and has already sparked a trade war with his closest partners, sending ripples across the world. With the US economy already performing strongly through 2024, specific sectors are likely to do well from his policies; but some of these companies may be overvalued, making them more vulnerable to changing interest rates.

As political events and economic data continue to drive market fluctuations, a well-diversified portfolio remains the best strategy to manage risk. We’re therefore continuing to invest more into alternative assets, especially those that benefit from sustainability drives. Securing the energy supply amid soaring demand will be a key investor focus, so we’re balancing the search for high-return equity investments with medium-term debt investments that can provide stable and attractive returns. 

What’s happening with renewables?

Despite Trump’s efforts, the shift towards sustainable investing continues to gain traction. Companies that contribute to the transition to a low-carbon economy are increasingly seen as strong long-term investments.

One key area of opportunity lies in alternative assets – that is, those that aren’t traded in share markets but are direct investments in things like sustainable energy infrastructure and efficient global supply chains (such as logistics centres). With rising energy demand driven by AI and digital advancements, renewable energy projects and energy security initiatives stand to benefit, becoming attractive options.

One of the investments in your super, with Infradebt Ethical Fund, provides financing to solar farms across Australia as well as wind, batteries and infrastructure. Grid-level batteries are key to securing a renewables-powered supply; Infradebt reports that over the past seven years, battery capacity in the National Electricity Market has grown from 0.1GW to 1.4GW, with an extra 5.3GW due to come online in the next two years. Infradebt screens out fossil fuels, nuclear power, seaports, airports, toll road and gas pipelines from its infrastructure investments.

The numbers

And now the part you’ve been waiting for... How has your super performed over the past three months? Here are the latest returns for Future Super’s options.

Returns are not guaranteed and past performance is not a reliable indicator of future performance.

*Source: SuperRatings. More information available here.

Data source: SuperRatings Accumulation Fund Crediting Rate Survey.

Performance shown net of investment fees and taxes, annualised performance shown for periods greater than 1 year. Returns are not guaranteed, and past performance is not a guide to future performance.

Investments may be held directly, or indirectly through Exchange Traded Funds (ETFs) and other managed investment vehicles.

See futuresuper.com.au/how-we-invest for information about our screening and investment processes, and what we mean by fossil fuel companies.