POWERED BY MOMENTUM MEDIA
‘Stunning’ rally bolsters super returns momentum
A strong sharemarket rally in the last five months has bolstered super returns up to 8.8 per cent for the financial year so far, according to Chant West.
The median growth fund (61–80 per cent in growth assets) returned 1.9 per cent over the month while the high growth (81–95 per cent) and all growth (96–100 per cent) options returned 2.3 per cent and 2.9 per cent, respectively.
On the other end, the conservative option (21–40 per cent in growth assets) also saw positive returns of 1.1 per cent while the balanced option (41–60 per cent) delivered 1.5 per cent.
Chant West senior investment research manager Mano Mohankumar noted two distinct periods observed in the financial year thus far, with growth funds retreating 1.9 per cent from July to October, only to gain a “stunning” 11 per cent on the back of the strong sharemarket rally from November to March.
“The financial year to date return of 8.8 per cent puts super funds on pace for a 13th positive return out of 15 years,” he remarked.
Particularly, Australian shares rose 3.3 per cent in March while developed international shares advanced 3.4 per cent in hedged terms.
Emerging markets, meanwhile, were up 2.3 per cent, despite a relatively flat month for Chinese equities.
Australian bonds also rose 1.1 per cent over the month while international bonds rose 0.8 per cent.
However, despite the strong momentum of super returns in the last five months, Mohankumar warned of increased market volatility in April, driven by inflation concerns after the US Federal Reserve indicated interest rate cuts are unlikely to take place by June.
“The escalating tensions in the Middle East have added to those inflation worries,” Mohankumar said.
“It’s a good time to remind members that super is a long-term investment and there’ll be ups and downs along the way. Members should take comfort in the fact that most Australians have their super invested in well-diversified portfolios that have weathered previous periods of market volatility, and they continue to meet their long-term risk and return objectives.”
Additionally, he cautioned against switching to a more conservative option or cash with a view to switching back to a growth option later.
“Attempting to time the market more often than not results in inferior long-term investment outcomes than if you stay the course,” he said.
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
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.
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(%)
