POWERED BY MOMENTUM MEDIA
Growth funds lose 0.5% in August
Political uncertainty and a possible US recession hit superannuation funds in August as the median growth fund (61 to 80% growth assets) lost 0.5% in August, according to Chant West.
However, the research house said July’s 1.4% return was able to offset the loss to give a return of 0.9% over the first two months of the financial year.
Australian shares lost 2.3%, while hedged international shares fell 1.9%, but the depreciation of the Australian dollar over the month turned that loss into a small gain of 0.3% in unhedged terms.
Chant West senior investment research manager, Mano Mohankumar, said there were a handful of growth funds that made a small return in August because the typical growth fund had around 48% of its investment allocation outside of shares.
These include unlisted property and infrastructure as well as traditional defensive sectors like bonds and cash. Bonds in particular provided strong returns in August due to falling long term bond yields, which helped offset the negative returns from shares,” he said.
“They’re also perceived to be safe-haven assets in times of uncertainty, so investor demands for bonds drove up their value.”
Mohankumar noted the volatility in August was mainly due to US/China trade tensions, the possibility of a US recession, Brexit uncertainty, and disappointing economic data from Germany which was usually the most resilient of the European economies.
He also said that while the growth category was where most people had their super, a meaningful number were in “lifecycle” products.
“Most retail funds have adopted a lifecycle design for their MySuper defaults, where members are allocated to an age-based option that is progressively de-risked as that cohort gets older,” he said.
However, it was difficult to make direct comparisons of the performance of these age-based options as the traditional options that were based on a single risk category.
Mohankumar said the younger members of retail lifecycle products – those born in the 1970s, 1980s and 1990s – had slightly outperformed the MySuper Growth median over most periods. However, they had done so by taking on more share market risk.
Recommended for you
APRA should release the data it has collected since 2021 on account-based pension investment returns now, says one of the superannuation sector’s peak associations.
Treasurer Jim Chalmers has announced a suite of new reforms as the government doubles down on its focus on strengthening retirement outcomes.
An independent review of Cbus conducted by Deloitte has deemed that “all existing and new directors” on the fund’s board have satisfied a ‘fit and proper persons test’.
Following Donald Trump’s election victory, US stock markets have started to retreat as investor sentiment begins to cool.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
