Growth funds to end FY19 with returns well ahead of inflation

With just two business days left in FY19, superannuation funds are poised to see a positive return of 7.1 per cent for the financial year, outstripping the current rate of inflation by more than 5.5 per cent.

The prediction by Chant West was based on median growth options, in which the majority of Australian workers were invested, that put super fund returns well above the typical long-term objective to beat inflation by 3.5 per cent.

While this figure was below the average returns members may have gotten used to over the last decade, which were close to nine per cent, Chant West senior investment manager, Mano Mohankumar, reminded consumers that such growth wasn’t sustainable as it represented the market’s recovery from the Global Financial Crisis rather than more regular conditions.

Indeed, the research house also warned that many sectors looked to be fully valued or close to it, so investors should expect some challenging times ahead. Further, while the second half of FY19 saw surging share markets off the back of a poor six months to December, during which growth funds lost 2.4 per cent, Mohankumar cautioned members “not to get carried away” as the global economic backdrop still faced uncertainties.

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The table below showed Chant West’s estimated diversified fund performance for FY19.