After dipping in September, superannuation funds are back in positive territory this month with the median growth fund up 0.6%, according to Chant West.
The research house confirmed October was the ninth positive month for super fund returns out of the last 10 months with growth funds up 11.2% year to date.
It said the median growth fund had a good chance of finishing 2021 in double digit territory with share markets up in November.
Chant West senior investment research manager, Mano Mohankumar, said the strong return this year came on the back of a better-than-expected result in 2020.
"Despite the severe downturn in February and March 2020, when markets first reacted to the COVID-19 crisis, the median growth fund finished last calendar year up 3.6%,” Mohankumar said.
“A positive result for 2021 – which now looks pretty certain – would represent the tenth positive calendar year in succession.
“We're now 19 months on from the COVID-induced low point at end-March 2020. Growth funds have returned an astonishing 29% from then, and now sit about 14% above the pre-COVID crisis high that was reached at the end of January 2020.”
Mohankumar said listed share markets remained the main drivers of growth fund performance.
“Australian shares were virtually flat in October with a return of just 0.1%. International shares were up 5.6% in hedged terms, but the appreciation of the Australian dollar over the month (from US$0.72 to US$0.75) pared that back to 1.7% unhedged,” Mohankumar said.
While in the US and eurozone, markets rose on the back of healthy corporate earnings reports despite supply chain disruptions impacting gross domestic product (GDP) growth.
“Closer to home, concerns around the Chinese property sector and potential spill over effects eased slightly after Evergrande avoided default on its debts for now,” Mohankumar said.
In terms of long-term performance, Chant West reported the median growth fund had returned 8.2% p.a. since the introduction of compulsory super in 1992.
“The annual CPI increase over the same period is 2.4%, giving a real return of 5.8% p.a. – well above the typical 3.5% target,” Chant West said.