Growth Funds in Australia 2026: Performance, Risks & What’s New

Growth funds are managed investment options designed to prioritise capital growth over income. They typically invest a significant portion—often between 70% and 85%—in growth assets such as shares (both Australian and international), property, and sometimes alternative investments. The remainder is usually allocated to defensive assets like cash or fixed interest.

Key features of growth funds:

• Aim for higher long-term returns, accepting more short-term volatility
• Commonly used in superannuation, especially for those with a longer investment horizon
• Diversified across asset classes and sectors

Growth funds are particularly appealing when interest rates are steady and returns from cash or bonds are limited. In 2026, with the Reserve Bank of Australia maintaining stable rates and global markets showing resilience, growth funds are once again a popular choice for investors willing to accept some ups and downs in pursuit of stronger long-term gains.

Several factors have contributed to renewed interest in growth funds this year:

• Share market recovery: Both Australian and international share markets have rebounded, supported by steady corporate earnings and improved investor confidence.
• Property market strength: Australian property values, especially in major cities, have continued to rise, benefiting funds with real estate exposure.
• Emerging sectors: Growth funds with allocations to technology, healthcare, and renewable energy have performed well, reflecting broader global trends.

These conditions have helped growth funds deliver stronger returns compared to recent years, making them an attractive option for those with a medium to long-term investment outlook.

The performance of growth funds has varied over the past few years. After a challenging period in 2022, when many growth assets experienced declines, markets began to recover through 2023 and 2024. By 2026, growth funds have generally reported positive returns, driven by:

• Resilient equities: Australian and global shares have contributed significantly to performance.
• Property recovery: Real estate investment trusts (REITs) and property trusts have rebounded as demand for housing remains strong.
• Sector leadership: Funds with exposure to technology, healthcare, and clean energy have benefited from ongoing innovation and investment in these areas.

It’s important to remember that growth funds can experience periods of negative or flat returns, especially during market downturns. While recent results have been positive, past performance is not a guarantee of future outcomes.

The investment landscape continues to evolve, and several developments in 2026 are shaping the way Australians invest in growth funds:

Greater Transparency and Comparability

Superannuation funds now provide clearer, more accessible information on performance and fees. Regulatory changes have made it easier for investors to compare options and identify underperforming funds. This increased transparency helps investors make more informed decisions about where to allocate their money.

Expanded Investment Options

Growth funds are offering more choice than ever before. Many now provide options focused on environmental, social, and governance (ESG) factors, as well as sector-specific strategies such as technology or climate innovation. This allows investors to align their portfolios with their values or target specific areas of growth.

Fee Reductions

Competition and regulatory scrutiny have led to lower fees across many mainstream growth funds. Lower costs can help improve net returns over time, making growth funds more accessible and appealing to a wider range of investors.

Tax and Reporting Changes

While the 2026 Federal Budget did not alter capital gains tax rules for managed funds, there have been updates to reporting requirements. This has prompted some investors to pay closer attention to after-tax returns and the tax efficiency of their investment choices.

Growth funds can offer attractive long-term returns, but they are not without risks. Understanding both sides is crucial before deciding if a growth fund fits your needs.

Potential Benefits

• Higher long-term growth: Growth funds aim to outperform more conservative options like cash or balanced funds over time.
• Diversification: By investing across multiple asset classes and sectors, growth funds help spread risk.
• Professional management: Fund managers handle asset selection and rebalancing, which can be beneficial for those who prefer a hands-off approach.

Key Risks

• Short-term volatility: Growth funds can experience significant fluctuations in value, including periods of negative returns.
• Not suitable for short-term needs: If you expect to need your money within the next few years, a growth fund may not be appropriate due to potential market downturns.
• Variation in performance: Not all growth funds are created equal. Differences in asset allocation, fees, and management approach can lead to varying results.

Growth funds are generally best suited to investors with a medium to long-term time frame—typically at least five to seven years. This includes those in the accumulation phase of superannuation, as well as anyone investing for long-term goals such as a child’s education or a future property purchase.

If you are comfortable with some short-term ups and downs in pursuit of higher long-term returns, a growth fund could be a suitable option. However, if you have a low tolerance for risk or need access to your funds in the near future, you may prefer more conservative investments.

Selecting the right growth fund involves more than just looking at past performance. Consider the following factors:

Asset Allocation

Review how the fund splits its investments between shares, property, and defensive assets. Some funds may have a higher allocation to international shares or specific sectors, which can affect both risk and return.

Fees and Costs

Lower fees can make a significant difference to your investment over time. Compare the total annual costs of different funds and consider how these impact your net returns.

Investment Approach

Some growth funds follow a passive strategy, tracking an index, while others are actively managed. Each approach has its pros and cons, so consider which aligns with your preferences and goals.

Fund Track Record

While past performance is not a guarantee of future results, a consistent track record can provide some insight into how a fund has managed different market conditions.

Values and Preferences

If responsible investing is important to you, look for growth funds that incorporate ESG criteria or offer options aligned with your values.

Many Australians are choosing to combine a core growth fund with other investments, such as direct shares, exchange-traded funds (ETFs), or sector-specific funds. This approach allows for greater customisation and the ability to fine-tune your risk and return profile.

Growth funds are enjoying renewed popularity in 2026, thanks to improving markets and more flexible investment options. They can be a powerful tool for building wealth over the long term, especially for those who can tolerate some volatility along the way. However, they are not suitable for everyone. Carefully consider your goals, risk tolerance, and investment horizon before deciding if a growth fund is the right fit for your portfolio.