Super returns modest in August

Superannuation funds had modest gains in August with the median growth fund rising 0.3 per cent as most asset sectors are now fully valued or close to it, according to Chant West.

Listed share markets, while producing mixed results in the month, were the main drivers of growth with Australian shares down 1.6 per cent, and international shares up 0.5 per cent on a hedged basis and 1.3 per cent in unhedged terms.

Both Australian and global real estate investment trusts (REITs) down 2.7 per cent and 2.2 per cent respectively.

Chant West director, Warren Chant, said while the first two months of the financial year were positive, the past couple of weeks had seen markets become more jittery amid growing expectations of a further interest rate hike in the US.

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"This nervous mood is likely to continue while there's still uncertainty about global interest rates, the outcome of the US election and the consequences of Brexit, among other concerns," Chant said.

"Most asset sectors are now fully valued or close to it, so it's hard to find reliable sources of real return.

"Super funds are going to find it tough to meet their long-term objectives, and members need to remain patient and recognise that in this low growth/ higher volatility environment they're likely to experience a period of lower returns."

Chant West's data also found that industry funds slightly outperformed retail funds in August, returning 0.4 per cent and 0.2 per cent respectively.

The research house said industry fund continued to hold the advantage over the longer term, having returned 5.9 per cent per annum against five per cent for return funds over the ten years to August 2016.