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Industry funds lead way in 2018
Superannuation funds managed to eke out a positive return for calendar year 2018, according to the latest analysis released by superannuation funds research and ratings house, Chant West.
The analysis said the average 0.8 per cent return may have been the lowest since 2011 but had served to extend the run of positive years to seven.
Chant West said QSuper had taken top spot in terms of returns, recording 2.8 per cent but that while the median growth fund return was in the black there were several in the category which had delivered negative returns, with the worst performer losing 2.5 per cent.
Commenting on the analysis, Chant West senior investment manager, Mano Mohankumar said the 2018 result was not surprising given the stellar run experience by funds since 2009 with the median growth fund averaging close to nine per cent.
He said the better performing funds in 2018 were those that had relatively higher allocations to unlisted assets such as infrastructure, property and private equity and to bonds at the expense of shares.
Mohankumar said having a higher proportion of your international shares unhedged would have also helped because the depreciation of the Australian dollar turned the unhedged loss of 7.5 per cent for that sector into a 1.5 per cent gain in unhedged terms.
Source: Chant West
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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
32.57 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
32.09 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
27.42 3 y p.a(%)
So some of the industry super outperformed to their high exposure to direct property and infrastructure? This is not true market value and inflates performance artificially. Valuation is via a discounted calculation. These superannuation funds could have a problem with liquidity if there was a run. Think of MTAA during the GFC. Comparing superannuation funds with high liquidity and true market valuation with potentially illiquid industry funds is not really comparing apples with apples. There is also the issue of industry designating their direct growth investments as defensive therefor creating a misrepresentation of the inherent risk of the investment.