POWERED BY MOMENTUM MEDIA
Super funds retreat further in May
Super funds retreated further in May, with the median growth fund (61% to 80% in growth assets) recording a 1% decline for the month, according to Chant West.
The research house said returns had worsened following “minor setbacks” in April and May.
“Share and bond markets have taken such a beating in the first half of June that, with less than two weeks of the year remaining, we estimate that the median growth fund return is now sitting at about -5% over FY22 to date,” it said.
“However, given the magnitude of recent market fluctuations, the final result could be materially different – either for the worse or the better.”
Chant West senior investment research manager, Mano Mohankumar, said while it was now almost certain that growth funds would finish the financial year in the red, members should resist taking drastic action.
“People need to see things in context. A negative result would be only the fifth in 30 years since the introduction of compulsory super in 1992. And remember that this year’s result comes on the back of the outstanding 18% return in FY21, the second best in the history of compulsory super.
“And even in the 2020 financial year, which included the COVID-induced share market meltdown, the loss was limited to just 0.6% on average. Quite a few funds actually delivered positive returns that year, so for many members a negative result this year would be their first in 13 years.”
He said fund members could also take comfort in the fact that, even after factoring in the large losses in June to date, the median growth fund was still 5% ahead of the pre-COVID high at the end of January 2020.
“More importantly, funds are continuing to meet their long-term return objectives with a comfortable margin to spare.
“When markets fall sharply, as they’ve done recently, there’s a tendency for some people to panic and think about moving money into less risky investment options, or to cash, with a view to switching back later.
“But attempting to time markets is a risky proposition. Far more often than not, it results in a worse outcome in the long run than if you sit tight and stay the course. Panicking only converts paper losses into real ones. Not only that, you risk missing out when markets rebound – as they will at some point. Even many members close to retirement can afford to take a long-term view.”
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(%)
