Superannuation research house SuperRatings estimates that the median balanced option delivered a return of 3.1% in July, with funds posting a strong recovery of earlier losses.
Australian and global equity markets drove the recovery, notably the S&P/ASX 300 Information Technology Sector Index posted a return of 15.4% for the month.
The cash rate rose to 1.85% with the Reserve Bank of Australia’s fourth consecutive rate rise in August demonstrating swift tightening action to quell mounting inflation pressures.
The median growth option rose by an estimated 3.5%, while the median capital stable option also delivered a positive result, with an increase of 1.9%.
Executive director of SuperRatings, Kirby Rappell, said: “We’ve been emphasising the importance of focusing on the long term and amid the recent market uncertainty it’s understandable that people have been concerned about the ups and downs in their account balances.
“This year we have seen the ongoing challenges of COVID-19 coupled with a challenging global economic environment driving the volatility.
“We continue to highlight the importance of setting your long-term investment strategy and the performance over the last month shows the perils of trying to time the market, with members who may have switched to more conservative investment options missing out on the bounce back.
“It is pleasing to see a strong recovery over the month of July demonstrating the resilience of super funds and their ability to navigate the uncertain investment environment. While we are likely to see bumps ahead, the long-term trend for super funds has remained strong and steady.”
There is a need for Australia’s superannuation funds to simplify their investment menus, according to the firm, given over a third of funds have more than 30 options, of which one or more are “arguably subscale”.
The research house is set to offer research ratings of superannuation funds for the first time amid growing demand from financial advisers.
Treasury is calling for submissions on its draft regulations in relation to the calculation of the proposed Division 296 tax.
Initially intended to offer a “simple, cost-effective” option for Aussies invested in default fund options, a super consultant has weighed in on what the scheme has actually done for members.
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