POWERED BY MOMENTUM MEDIA
Share market strength positive for super funds
The ongoing rally in the share markets has treated superannuation funds well, with Chant West finding that the median growth fund gained 2.7 per cent in February, up 0.2 percentage points on the month before.
This came off the back of Australian shares jumping six per cent in February and their international counterparts growing 3.3 per cent in hedged terms and 5.6 per cent unhedged. Listed property also rallied, with Australian and international REITS growing 1.8 and 0.3 per cent respectively.
Chant West senior investment manager, Mano Mohankumar, said that the strength of the share market was the main factor driving growth fund performance, more than offsetting the impacts of the December quarter’s market slump.
“The worst thing to do after the December quarter falls would have been to switch into a more conservative option with a lower exposure to shares. Not only would you have locked in the losses, but you would also have missed out on the January and February rebound,” he said. “As always, the message is to choose an appropriate option and stick with it.”
Mohankumar warned however, against getting carried away with confidence in the share market rally, particularly globally.
“The share market rebound has been driven partly by optimism that the trade dispute between the US and China is closer to resolution, with the US suspending its plan to increase tariffs on Chinese goods. In the UK, meanwhile, the Brexit puzzle is still a long way from being solved but at least there are signs that a hurried exit from the EU may have been averted,” he cautioned.
“The concerns about China-US trade relations, Brexit and the pace of global economic growth may have lessened but they have not gone away. Additionally, most asset sectors are still fully valued or close to it, so there are no easy sources of return for asset managers.”
The research house also found that the performance from lifecycle products was what they would expect at this point, with older members having being shielded from risk over the problematic December quarter.
At the same time, it found that at last month’s end, long-term performance for superannuation funds was once again above target.
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(%)
