With interest rates expected to plateau and global markets finding their rhythm after a wild few years, Australian investors are asking: is 2025 the year to double down on growth funds? Whether you’re building super, saving for a home, or simply seeking stronger returns, understanding the current landscape is crucial. Here’s what’s changed—and what you need to know—before you commit to a growth-focused portfolio this year.
What Are Growth Funds—and Why the Renewed Buzz in 2025?
Growth funds are managed investment options that prioritise assets with high potential for capital appreciation. Typically, they allocate 70–85% of their portfolio to shares (Australian and international), property, and sometimes alternative investments, with the remainder in defensive assets like cash or bonds.
- Higher potential returns over the long term, but more volatility along the way
- Commonly used in superannuation default options and by investors with a longer time horizon
- Appealing in periods where cash and bonds yield less, as has been the case since the RBA’s mid-2024 pause on rate hikes
In 2025, growth funds are regaining attention as local and global stock markets recover, and property prices in Australia show robust growth, especially in major cities. The ASX 200 has already posted a 9% gain in the first half of the year, and many diversified growth funds are reporting double-digit 12-month returns for the first time since 2021.
Performance Trends: Real-World Results and What’s Driving Them
The past few years have been a rollercoaster for growth fund investors. After a tough 2022, when tech stocks and property trusts sank, 2023–2024 saw a cautious rebound. In 2025, several factors are shaping performance:
- Resilient equities: Both the ASX and global indices are up, buoyed by strong corporate earnings and renewed appetite for risk.
- Australian property surge: REITs and property trusts are bouncing back as migration boosts demand and construction bottlenecks persist.
- Tech and renewables: International growth funds with exposure to AI, clean energy, and healthcare have outperformed, riding global megatrends.
According to Chant West, the median Australian growth super fund returned 7.2% in the 12 months to March 2025—well above inflation and the official cash rate. Some leading retail and industry funds (like AustralianSuper and Hostplus) have posted annual growth returns of 8–10%, led by equities and property allocations.
However, it’s not all smooth sailing. Growth funds remain sensitive to global shocks—think US rate moves, China’s recovery, or local housing policy changes. Short-term dips are still part of the package.
Policy and Product Updates: What’s New for Growth Fund Investors?
There are several important policy and product shifts in 2025 that every growth fund investor should know:
- Super stapling and transparency: Australian super funds now provide clearer, easier-to-compare performance and fee data. The MySuper Performance Test has become stricter, with a new pass mark and public naming of underperformers.
- Green and tech-tilted options: More funds offer ESG or sector-specific growth options—think climate innovation or global tech—catering to investors wanting both returns and impact.
- Fee pressure: Competition and regulator scrutiny have driven down fees, with many mainstream growth funds now charging 0.6–1% p.a. in total costs, down from 1.2%+ a few years ago.
- Tax tweaks: The 2025 Federal Budget left capital gains tax rules unchanged but increased reporting for managed funds, making after-tax returns a bigger focus for some investors.
For example, Sunsuper’s Sustainable Growth Fund has added new exclusions for fossil fuels, while REST’s Core Strategy has increased its allocation to global equities. These changes reflect growing demand for both performance and values alignment.
Risks, Rewards, and Who Should Consider a Growth Fund in 2025?
Who are growth funds for in 2025? They’re best suited to Australians with at least a 5–7 year investment horizon—think those in the early to mid stages of super accumulation, or anyone investing for long-term goals like a child’s education or future property purchase.
Key pros:
- Higher long-term return potential than cash or conservative balanced funds
- Diversification across sectors and asset classes
- Access to professional management and rebalancing
Key risks:
- Short-term volatility: Expect some years of negative or flat returns, especially when markets are choppy
- Not suitable for short-term needs: If you need your money within 3 years, consider more defensive options
- Performance dispersion: Not all growth funds are equal—check past results, fees, and asset mix
It’s also worth noting that in 2025, more Australians are blending core growth funds with tactical satellite investments—like direct shares, ETFs, or sector-specific funds—to fine-tune their risk and return profile.
Conclusion: Growth Funds Are Hot—But Are They Right for You?
Growth funds are enjoying a resurgence in 2025, thanks to strong equity markets, rising property values, and evolving fund options. They’re a compelling choice for investors seeking higher returns and able to ride out the bumps. But they’re not a one-size-fits-all solution. Assess your goals, risk tolerance, and time frame before making the leap.