"I can't see any reason to change the course of the ship," he added. About half of Hostplus' balanced fund is invested in equities, with 10 per cent invested in infrastructure, 15 per cent in direct property and 5 per cent in private equity.

Some 55 per cent of Catholic Super's balanced portfolio is invested in shares and 12 per cent in infrastructure and property combined. Melbourne-based Catholic super manages $7.5 billion on behalf of 73,000 members.

Boost from Australian shares

Chant West director Warren Chant said members should be "very pleased" with the performance of super funds in 2016, which was powered by an 11.8 per cent gain in Australian shares, including dividend payments, and a 8 per cent rise in global shares on an unhedged basis.

"It was achieved against a backdrop of unsettled global politics and a relatively weak economic environment," Mr Chant said.

"While shares are the main drivers of performance, the major funds are well diversified across other assets as well, and in 2016 all asset sectors delivered positive returns. Some did better than others, of course, and the better performing funds were generally those that had higher allocations to Australian shares, Australian listed property, unlisted property and infrastructure."

Last year's average return was considerably higher than the average gain of 5.7 per cent recorded in 2015. The result means the average balanced vehicle has posted an annualised gain of 8.2 per cent since July 1992, easily exceeding funds' internal targets.


Balanced funds typically aim to beat inflation by between 3 and 4 per cent over the long term. An 8.2 per cent annual gain suggests funds have exceeded inflation by about 5.7 per cent every year. "Over the longest period we can measure funds have well and truly met their return objective," Mr Chant said.

Rounding out the top 10 performing balanced funds in 2016 were Cbus, CareSuper, Sunsuper, Energy Super, Statewide Super, HESTA, Buss (Q) and AustralianSuper.

Unlisted infrastructure was the best performing asset class in the 12 months to December, Chant West said, with prices rising 17.3 per cent. Australian listed property gained 13.2 per cent and unlisted property rose 11.1 per cent.

Catholic Super chief investment officer Garrie Lette attributed the fund's double-digit gain in part to the outperformance of its Australian active managers, lead by deep value manager Allan Gray, the top-performing Australian equity fund in 2016 after recording a 38.1 per cent return.

Mr Lette said he doubted returns would be as buoyant over the next 12 months, given the potential for interest rate rises in the US and the possibility that President-elect Trump will not stimulate the economy as much as anticipated.

Tim Ridley, investment strategy manager at the $37 billion Cbus industry super fund, said he was "neutral to modestly positive" for markets in 2017.

"I think this year is going to be reasonable from a return point of view," Mr Ridley said, describing asset prices as "fair value to moderately expensive."


He said that on the upside, global growth was reasonably strong as emerging market economies picked up, but noted that investors were several risks, including high debt levels in China, the possibility of election surprises in key European countries and policy uncertainty in the US due to Mr Trump's erratic behaviour.

"The market is fixated on stimulus, not policy uncertainty," Mr Ridley said.

About 46 per cent of the Cbus balanced portfolio is invested in equities, with 11 per cent in infrastructure and another 11 per cent in property. The investment specialist did not foresee any substantial changes being made to the asset mix.

Cbus was ranked third in the 12 months to December with a 9.6 per cent gain. Over 10 years the fund is also ranked third, with an average annual gain of 6.1 per cent, slightly below CareSuper and REST.

Mr Sicilia said he did not expect US interest rates to rise much in the next 12 months.