Top 10 Balanced super funds ranked by risk and return

In volatile markets a super fund that provides a smoother investment journey is likely to be attractive for people who want to earn a decent return and still be able to sleep at night, especially as they approach retirement.

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What is the Sharpe ratio?

The measure SuperRatings uses to rank funds by risk-adjusted returns is the Sharpe ratio. It was developed by Nobel laureate William F. Sharpe and has been widely used at the pointy end of the funds management industry ever since. It helps investors understand the return of an investment relative to the risk taken to achieve it.

Let’s unpack that a bit. There are three ingredients:

• Average return. The average of a fund’s annual returns over a given period. Say a Balanced fund returned an average of 8% per year over seven years.
• Risk-free rate of return. The average return from government bonds over the same period, generally the Australian Government Bond Index. Say that was 4%. Subtracting the risk-free rate from the fund’s average return isolates the extra return earned by taking on investment risk, in this case 4% (8% minus 4%).
• Volatility. Measured by a statistical measure called the standard deviation, which shows how far a fund’s annual returns deviate from its average return. A low standard deviation means annual returns stay close to the average. A high standard deviation means they are widely dispersed.

So, what does this look like in practice? Say two funds report the same average annual return of 8% over seven years. One achieves this with relatively consistent annual returns of between 6% and 10%. The other fund’s annual returns fluctuate wildly, from a low of 1% one year to a high of 15% the next. The two funds’ long-term performance is the same, but one fund got there by taking far less risk. The lower the standard deviation, the lower the volatility and the higher the Sharpe ratio.

If that’s just too confusing, it’s enough to know that the greater the value of the Sharpe ratio, the more attractive the risk-adjusted return.

Unfortunately, super funds don’t routinely disclose the Sharpe ratios of their investment options, which is where the SuperRatings ranking below comes in.

Top 10 funds based on volatility-adjusted performance over seven years to 30 June 2026

Source: SuperRatings. Returns to end June 2026, after fees and taxes. Volatility and return ranking based on Sharpe ratio.

The risk-return trade-off

There was a shake-up at the top of the table in 2026. First Super’s Balanced option took the number one spot with an average annual return of 7.1%, ending Australian Retirement Trust’s two-year run at the top. Australian Retirement Trust slipped to third with an average annual return of 7.9%.

What pops out of the table above is that although First Super topped the list, its 7.1% average annual return over seven years was close to the lowest of the top 10. It earned its ranking by delivering that return with the least volatility. Conversely, ESSSuper (8.6%), Brighter Super (8.2%) and Hostplus (8.1%) all delivered higher returns over the period, but they did so by taking on a slightly higher level of risk. The lowest return of the top 10 was CareSuper’s 7.0%.

The list was more stable than last year, when only four funds retained their place. Seven of the 2025 top 10 remained on the list, with Aware Super, Prime Super and IOOF Employer Super making way for First Super, NGS Super and Equip Super.

For context, the top 10 Balanced options ranked by returns alone (not adjusted for risk) all achieved a return of 9.9% or more in the year to June 2026, while the median Balanced option returned 9.4%.

Even so, it’s pleasing to see that funds can deliver a somewhat smoother investment journey as well as good long-term returns. The typical long-term return objective for Balanced super funds is to beat inflation by 3.5% per year. This has been achieved by the top performers in the table above, with inflation averaging around [check: average annual CPI over the seven years to June 2026]% a year over the past seven years.

Similar labels, different journeys

Although super funds may have similar looking investment options – in this case they are all Balanced options (60–76% growth assets) – there is wide variation in how they invest members’ money. The funds with the highest absolute returns over seven years tend to hold a higher proportion of members’ savings in shares, while the funds at the top of the risk-adjusted ranking tend to lean more on diversification and defensive assets to smooth the ride.

That is why two funds with the same label can deliver very different experiences along the way, and why it’s worth checking what your fund’s option actually holds rather than relying on its name.

Retirees lose appetite for risk

Volatility is likely to remain a feature of investment markets over the coming year. Combined with people’s lack of appetite for volatility as they approach retirement and deal with cost of living pressures, providing a smooth ride is likely to remain a big consideration for super funds and their members.

“Funds have done an excellent job of both managing risk and educating their members on these issues, but more can be done in this space,” says Rappell.