The Australian banking sector, including dividends, returned -10.4 per cent over the past 12 months, said UniSuper – making it the second-worst sector (behind energy).

"On a positive note, all of our diversified options have held an underweight position in the banks (relative to their respective weight in the market) as we have been wary of the headwinds facing the sector," said the fund.

However, UniSuper conceded that one can be underweight the sector but still overexposed – particularly in a sector as large as banking.

"Their valuations are now at levels that should find support, although it’s hard to see the sector outperforming in the near term given the headwinds outlined above," said the fund.

Woolworths was "one of [UniSuper's] major regrets" last year, and "it unfortunately qualifies for a dishonourable mention again this year".

The superannuation fund began accumulating shares in stock at "around $33", and it is now trading at around $21.

"We decided to hold on to Woolworths because in our view their problems were fundamentally related to poor management (as distinct from structural challenges posed by competitors like Aldi)," said UniSuper.

"The good news is that the new board and management in charge of Woolworths have been refreshingly candid about past mistakes.

"The bad news is that we underestimated just how poorly the business had been run, resulting in another downgrade and the first dividend cut in Woolworths’ history," it said.

At the "risk of looking stubborn", UniSuper is holding onto its Woolworth shares in the hope that its share price is "closer to the bottom than the top".

"We don’t want to look silly selling at the bottom. Of course, we could have said the same thing this time last year. The market has a habit of making investors look silly," said the fund.