Early estimate has super funds returning 7.1% in 2018/19

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An early estimate has the median growth super fund returning 7.1% in 2018/19, which would be the tenth consecutive year of positive returns.

Superannuation funds are “poised” for a record-breaking tenth consecutive financial year of positive investment returns, according to research firm Chant West.

An early estimate has the ‘median growth fund’ – with 61% to 80% in growth assets, and in which most Australians have their super invested – returning 7.1% for the 2018/19 financial year.

“Fund members should be very pleased with a return in the order of 7.1%,” said Chant West senior investment research manager Mano Mohankumar.

“That’s more than 5.5% above the current rate of inflation – well above the typical long-term objective which is to beat inflation by 3.5%.”

Mohankumar said that super funds were growing the retirement savings of members well above increases in the cost of living, and had been doing so for a long time. Though the 2018/19 returns haven’t reached the peaks of recent years, with the average return over the past 10 years at close to 9%.

“That’s a tremendous run, but we should remember that it really represents the recovery from the setback of the GFC, so it would be a mistake to assume it’s sustainable. Indeed, with many asset sectors looking to be fully valued or close to it, we’re expecting some challenging times ahead.”

“The 2018/19 financial year has been a tale of two halves. Over the six months to December growth funds lost 2.4% but, since then, they’ve surged nearly 10% – largely on the back of strong share markets. However, we caution members not to get carried away because the global economic backdrop is still dogged by uncertainties.”

“This year’s median return of 7.1% is a terrific result in the circumstances and, as always, some individual funds will have done better and some worse. This year’s top funds in our Growth category may report a return as high as 10%, which is about 8.5% above the inflation rate. Even funds at the bottom end of the range are likely to deliver respectable positive returns.”

As is often said, past performance isn’t an indicator of future performance.

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