Looking to accelerate your wealth in 2025? Growth funds are front and centre for Australian investors seeking robust, diversified returns. But with new regulations, shifting markets, and smarter strategies, knowing how to leverage these investment vehicles is crucial for success.
What Exactly Is a Growth Fund in 2025?
A growth fund pools investor money to purchase a diversified portfolio of assets, with a focus on capital appreciation rather than income. In 2025, most Australian growth funds allocate around 70–85% to growth assets (shares, property, infrastructure) and the remainder to defensive assets (bonds, cash). The goal: outpace inflation and deliver long-term gains, even if it means riding out short-term volatility.
Key features of modern Australian growth funds:
- High Equity Exposure: Often 60–80% in Australian and global shares for aggressive growth.
- Diversification: Inclusion of property, infrastructure, and alternative assets to balance risk.
- Active vs. Passive Management: Many funds now blend index (ETF) strategies with tactical active tilts.
- ESG Integration: Environmental, Social, and Governance filters are now standard, responding to regulatory pressure and investor demand.
2025 Updates: Regulatory Shifts and Market Trends
This year has seen some significant changes impacting growth funds in Australia:
- APRA Performance Testing: The Australian Prudential Regulation Authority has tightened annual performance benchmarks for superannuation growth funds. Underperformers face greater scrutiny and must inform members if they fail the test for two consecutive years.
- Fee Transparency: ASIC has enforced clearer disclosure on all-in costs, including indirect costs and performance fees. Comparing funds is now easier for everyday investors.
- Greenwashing Crackdown: Regulators are cracking down on misleading ESG claims. Growth funds are required to substantiate their sustainability credentials, which means better quality for ESG-minded investors.
- Market Dynamics: With the ASX 200 hitting fresh highs in early 2025 and global equities rebounding, growth funds have delivered double-digit annual returns over the past 12 months. However, volatility remains, especially as central banks adjust rates in response to persistent inflation.
Who Should Consider a Growth Fund?
Growth funds aren’t one-size-fits-all. They suit investors with:
- Long investment horizons—think 5+ years, such as those investing through superannuation or for major life goals.
- Comfort with short-term ups and downs in exchange for higher potential returns.
- Desire for diversification without the hassle of assembling a portfolio from scratch.
Case study: Sarah, a 35-year-old Sydney professional, switched her super to a leading growth fund in early 2023. Despite a rocky 2024 with global rate hikes, her fund rebounded strongly in 2025, growing 12% year-to-date—significantly outpacing more conservative options. Her fund’s allocation: 70% equities (half international), 15% property/infrastructure, 15% fixed income/cash.
How to Choose a Growth Fund in 2025
With dozens of options in the market, focus on these factors:
- Performance Track Record: Look for funds that consistently outperform their benchmark after fees—especially under APRA’s performance test.
- Fee Structure: Compare the total cost (MER/ICR), as even a 0.5% difference can compound significantly over a decade.
- ESG and Ethical Filters: If sustainability matters, scrutinise the fund’s methodology and reporting.
- Liquidity and Flexibility: Some funds allow switching or rebalancing more frequently, which can be useful in volatile times.
For example, in 2025, industry leaders like AustralianSuper, Hostplus, and Vanguard Growth Index Fund have all revamped their product disclosure statements and added new ESG screens. Recent entrants, such as Betashares and Spaceship, have launched growth ETFs with ultra-low fees and innovative tech exposure.
Risks and Considerations
No investment is risk-free. With growth funds, the main risks are:
- Market Volatility: Share-heavy portfolios can swing sharply in the short term.
- Manager Risk: Active strategies may underperform the index, especially after fees.
- Currency Risk: International exposure can boost returns or amplify losses if the AUD swings.
Smart investors review their fund’s performance annually, rebalance as needed, and avoid panic moves during market dips.
The Bottom Line
Growth funds remain a powerful tool for Australians to build long-term wealth, especially in a dynamic 2025 market. With regulatory reforms, improved transparency, and exciting new fund options, now is the time to review your investment strategy and ensure your money is working as hard as you are.
