Chant West’s latest data has confirmed that super funds are on track to deliver a ninth straight financial year of positive returns to members, with median growth super funds gaining 0.4 per cent in May.
May’s growth, although modest, would take the total returns for this financial year to eight per cent, with a month still remaining.
Share markets were up over May which, as the main drivers of growth fund performance, contributed to the positive returns. Australian shares grew 1.2 per cent while international shares gained 1.3 per cent in hedged terms, although appreciation of the Australian dollar limited the return in unhedged terms to 0.4 per cent.
Listed property also served members well, with Australian and global REITS up 3 and 2.2 per cent respectively.
Chant West senior investment research manager, Mano Mohankumar, warned that the year’s returns would not be as high as in recent years, but was still optimistic they would hit double figures.
“Markets are up so far in June, and with less than two weeks of the financial year remaining we estimate that the median return for growth funds is sitting at about 9.3 per cent. So, the better performing funds have a chance of finishing the year in double-digit territory,” he said.
“Overall, it’s shaping up as an excellent result when you consider that the typical long-term return objective for growth funds is to beat inflation by 3.5 per cent, which in current terms translates to a return of 5.5 to six per cent.”
A member of the super fund has approached ASIC to investigate potentially misleading or deceptive representations by UniSuper regarding the holdings of its sustainable portfolios.
The median growth fund delivered 1.9 per cent in March, adding to the “stunning” rally that has seen super funds gain 11 per cent since November.
Vanguard has affirmed its support for the current super performance test, emphasising the importance of keeping the process straightforward.
While some superannuation funds have gone down the route of internalisation, others say they favour ‘smart partnering’ with external managers for diversification appeal.
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