Superannuation funds keep 2011 losses to a minimum

The median superannuation fund limited its losses to 2.6 per cent for the 2011 calendar year, despite much larger losses in share markets in Australia and overseas, according to Chant West.

The median result for the calendar year to November 2011 was -2 per cent, and Chant West estimates that the figure for the 2011 calendar year will be a negative return of 2.5 to 2.6 per cent.

Chant West director Warren Chant said super funds managed to avoid replicating the large falls in stock markets because they are diversified across a range of assets, including some defensive assets.

"While any negative return is disappointing, this is far less damaging than the 21.5 per cent loss that members experienced in 2008 at the height of the global financial crisis," Chant said.

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However, investors in conservative funds had a much more successful year. Chant West expects the median conservative fund (with 21 to 40 per cent invested in growth assets) to deliver a positive return of 2.5 per cent for the 2011 calendar year.

The positive performance of conservative funds is a result of their high weighting to Australian and international bonds, which delivered double-digit returns in 2011.

Industry funds tend to fare better than retail master trusts during periods of falling listed markets, since they have a lower weighting to listed shares and property, according to Chant West. Industry funds returned -1 per cent in November, while master trusts returned -1.3 per cent.