POWERED BY MOMENTUM MEDIA
Relief for super funds in April
While the median growth fund (61% to 80% growth assets) bounced back 3.1% in April, returns during the first 10 months of the financial year to date are still at a loss of 3.3%, according to Chant West.
The research house said shares in April rebounded as investors grew more optimistic as COVID-19 curves started flattening around the world and there were expectations of lockdowns easing and economies starting to reopen.
Chant West’s senior investment research manager, Mano Mohankumar, said while April provided some relief it was still too early to tell what the full impact of COVID-19 would be on companies, industries and the global economy.
“We are heading towards a global recession, but we don’t know what the shape of that recession and the eventual recovery will be. However, we do know that markets bounce back faster than economies,” he said.
“Regardless of the pace of any recovery, we should expect heightened volatility to continue as investors react sharply to news – good or bad.”
Looking over the longer term, the data found over the 10 years to 30 April, 2020, high growth funds returned 7.5%, growth funds returned 6.9%, balanced funds returned 5.9%, and conservative funds returned 5.1%
Mohankumar noted that superannuation funds had already seen some members “hurt themselves” by locking in losses in March by switching to a more conservative option, and perhaps with the intention of switching back later as markets rallied.
“This is the very thing we caution against. Trying to time markets is a risky proposition at any time. If you take panic action after share markets have already fallen you only convert paper losses into real ones,” he said.
“Not only that, you also risk missing out when markets rebound as they will at some point. Being out of the market during share market volatility, even for a few key days, can make a significant difference to your returns.”
Chant West data showed Australian shares returned 9% in April, and international shares were up 10.6% in hedged terms but the appreciation of the Australian dollar over the month reduced that gain in unhedged terms to 3.6%. On average, funds had about 70% of their international shares exposure unhedged.
Recommended for you
Super funds had a “tremendous month” in November, according to new data.
Australia faces a decade of deficits, with the sum of deficits over the next four years expected to overshoot forecasts by $21.8 billion.
APRA has raised an alarm about gaps in how superannuation trustees are managing the risks associated with unlisted assets, after releasing the findings of its latest review.
Compared to how funds were allocated to March this year, industry super funds have slightly decreased their allocation to infrastructure in the six months to September – dropping from 11 per cent to 10.6 per cent, according to the latest APRA data.
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
31.73 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
30.15 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.71 3 y p.a(%)
