POWERED BY MOMENTUM MEDIA
Inflation pinch drives slightly negative super returns
With SuperRatings estimating a 0.2 per cent loss on the median balanced option in May, inflation and tightening monetary policy have continued to affect fund returns.
The median growth option fell by an estimated 0.3 per cent in the month while the median capital stable option was estimated to decline by 0.2 per cent.
However, the research house still expected super funds to manage a return above inflation for the last 12 months, estimating financial year to date returns on a balanced option to be 7.9 per cent as at the end of May.
Kirby Rappell, executive director of SuperRatings, said: “While May saw a small fall, funds are currently on track to deliver a return in excess of inflation, so funds have kept the value of members’ money from diminishing in a high inflation environment, which has been no simple task.”
In terms of pension returns, the median balanced option was an estimated 0.3 per cent decline.
The median capital stable pension option fell by an estimated 0.2 per cent over the month and the median growth pension option was also predicted to fall by some 0.3 per cent.
Rappell added that inflation and monetary policy in response to inflation were the most influential factors for super performance this financial year and was expected to persist into FY24.
“Super fund returns have had a bumpy year with markets facing several shocks over the last 11 months; however, funds continue to navigate the challenges well with most accounts seeing growth over the course of the full year,” Rappell said.
Looking at the numbers in dollar terms, members with $100,000 invested in the balanced option at the start of July 2022 would have an estimated $107,833 in their account at the end of May, not accounting for administration fees or any insurance premiums they may pay.
For members investing in the more defensive capital stable option, they would have some $104,677 with smaller ups and downs throughout the year, while members that limited their investments to cash would have a lower overall balance of $102,358 while seeing small gains each month.
“This demonstrates that fund’s investment strategies are behaving as expected by trading off between account growth and a smooth return, even in such uncertain times,” SuperRatings added.
AUTHOR
Rhea Nath
Rhea L Nath is a journalist on Super Review and InvestorDaily, with a focus on funds management, superannuation, and institutional investment. Previously, she covered small business and entrepreneurship news at Dynamic Business and multicultural issues at Indian Link Media Group. In 2022, she was named Young Journalist of the Year at the NSW Premier’s Multicultural Communications Awards.
Recommended for you
The super fund announced that Gregory has been appointed to its executive leadership team, taking on the fresh role of chief advice officer.
The deputy governor has warned that, as super funds’ overseas assets grow and liquidity risks rise, they will need to expand their FX hedge books to manage currency exposure effectively.
Super funds have built on early financial year momentum, as growth funds deliver strong results driven by equities and resilient bonds.
The super fund has announced that Mark Rider will step down from his position of chief investment officer (CIO) after deciding to “semi-retire” from full-time work.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
76.97 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
76.46 3 y p.a(%)
3
UBS Solactive Global Pure Gold Miners UCITS ETF Dis USD
51.13 3 y p.a(%)
4
Global X GlobalX FANG+ ETF
45.15 3 y p.a(%)
5
Select Baker steel Gold Institutional
43.78 3 y p.a(%)
