Asset allocation — the mix of investment types in your super — is one of the most significant determinants of your long-term retirement outcome. Getting this right matters far more than most other decisions you make about your super.
The Basic Split: Growth vs Defensive
Most super funds categorise investments into two broad types:
Growth assets (higher risk, higher expected long-run return):
- Australian shares
- International shares
- Listed property (REITs)
- Unlisted property
- Infrastructure
- Private equity
Defensive assets (lower risk, lower expected return):
- Fixed income (bonds)
- Cash
- Term deposits
The proportion of growth vs defensive assets in your option determines its risk profile and long-run return expectation.
Standard Option Labels (APRA/ASIC SuperRatings classification)
| Option label | Approx. growth % | Approx. defensive % | Expected long-run net return |
|---|---|---|---|
| All Growth / High Growth | 85–100% | 0–15% | 8–10% p.a. |
| Growth | 70–85% | 15–30% | 7–9% p.a. |
| Balanced | 60–70% | 30–40% | 6–8% p.a. |
| Conservative Balanced | 40–60% | 40–60% | 5–7% p.a. |
| Conservative | 20–40% | 60–80% | 4–6% p.a. |
| Capital Stable / Defensive | 0–20% | 80–100% | 3–5% p.a. |
Note: Return estimates are illustrative and based on historical ranges — actual returns will vary. Past performance is not a reliable indicator of future performance.
Key Asset Classes Within Growth and Defensive
Australian Shares
- Exposure to the ASX — major companies (BHP, CBA, CSL, etc.)
- Includes dividends with franking credits (valuable inside super’s 15% tax environment)
- Historically returned approximately 8–10% p.a. over long periods
International Shares
- Exposure to global markets (US, Europe, Asia, emerging markets)
- Historically returned approximately 9–12% p.a. over long periods (currency effects can add or subtract)
- Diversifies away from Australia’s market concentration
Australian Fixed Income (Bonds)
- Government and corporate bonds
- Defensive, capital-preserving
- Returns approximately 3–5% p.a.; inverse relationship with interest rates
Cash
- Low risk, low return (approximately 2–4%)
- Appropriate for near-term drawdown or as a temporary risk-reduction measure
Infrastructure and Property
- Unlisted infrastructure (airports, toll roads, utilities) — long duration, stable income, valued infrequently
- Listed REITs — traded on ASX, more volatile than unlisted property
How to Choose Your Asset Allocation
Key factors:
- Time until retirement: The longer your timeframe, the more growth risk you can absorb. 20+ years: consider high growth. Under 5 years: consider balanced or conservative.
- Ability to stomach short-term losses: Growth options can fall 30%+ in a bad year. Can you stay invested?
- Other sources of income and wealth: If you have significant other assets or income, your super can take more risk.
- Specific financial goals: Early retirement, partner, children, property — these affect your drawdown timeline.
A simple rule of thumb (not personal advice):
Some use a rule like: “defensive % ≈ your age”. At 30 → 30% defensive, 70% growth. At 60 → 60% defensive, 40% growth.
This is a starting point only — many younger members may benefit from higher growth exposure for longer.
The Cost of Being Too Conservative
One of the most common super mistakes is being in an overly conservative option for your age. The compounding cost over 30 years is significant:
| Option | Assumed net return | $100,000 after 30 years |
|---|---|---|
| High Growth | 8% | ~$1,006,000 |
| Balanced | 6.5% | ~$661,000 |
| Conservative | 5% | ~$432,000 |
The difference between high growth and conservative over 30 years is approximately $574,000 on a single $100,000 investment.
For more: Good Super Fund Return, Returns by Asset Class, International Shares Option, Super at 30 — What to Do. For advice tailored to your situation, speak with a licensed financial adviser via MoneySmart.