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Super funds face tough year end
Superannuation funds might end the year in negative territory for the first time since 2011 because of the recent market volatility, financial advisory firm Dixon Advisory said.
According to Dixon’s head of advice, Nerida Cole, super fund members should prepare themselves for more volatility which would be driven by the ongoing US-China trade dispute, Italian budget crisis, rising interest rates in the US, slowing in the Chinese economy and a slowing Australian property market. And on top of that would come the complexity of Brexit, she said.
“The big detractors this year were Asian and European share markets – and people with more of their money in these regions would be facing bigger drops,” Cole noted.
“If we see markets continue to fall over the next two weeks – super funds could end up in negative territory.”
Looking ahead, Cole reminded investors they should take a more cautious approach towards investments and check how their super was invested, including spread between shares and cash and whether this mix was right for them.
Investors should also pay a closer attention and review their long-term returns, taking into account the Productivity Commission’s indications that the average valanced funds would return around six per cent per year over the last 10 years.
“In short, there is no need to settle for a fund that’s not working for you and certainly no need to settle for an underperforming fund,” she said.
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Vanguard Super has reported strong returns across most of its investment options, attributed to a “low-cost, index-based approach”.
The fund has achieved double-digit returns amid market volatility, reinforcing the value of long-term investment strategies for its members.
Australian super funds notched a third consecutive year of strong returns, with the median balanced option delivering an estimated 10.1 per cent over the 2024-25 financial year, but an economist has warned that the rally may be harder to sustain as key risks gather pace.
AustralianSuper has reported a 9.52 per cent return for its Balanced super option for the 2024–25 financial year, as markets delivered another year of strong performance despite the complex investing environment.
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