Solid start to 2019/20 for super fund returns, median fund up 2%

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Super fund investment returns are off to a “solid start” for 2019/20, up 2% in the September quarter, according to research firm Chant West.

The ‘median growth fund’ – with 61-80% invested in growth assets – was up 1.2% for the month of September 2019, putting the return for the quarter at 2%.

Shares, both domestic and overseas, largely drove growth in the quarter. The returns were “solid”, even after the volatility in August which contributed to the 0.5% decline in that month. Australian shares were up 2.6% for the quarter, and international shares were up 1.5% when hedged for currency, but up 4.7% unhedged due to a fall in the Australian dollar.

Bonds also had a “strong” quarter, with domestic bonds up 2% and international bonds up 2.3%.

“Notwithstanding the healthy overall result over the September quarter, the volatility we encountered in August isn’t going away,” said Chant West senior investment research manager Mano Mohankumar.

“We expect challenging times ahead as the global economy continues to be dogged by uncertainty. Share markets have proved resilient so far, but we anticipate more turbulence ahead in the current jittery climate.”

“While we expect some challenging times ahead, most Australians should take comfort that their superannuation is mostly invested in well-diversified portfolios with their investments spread across a wide range of asset sectors. The typical growth fund also has more resilience built-in than it did a decade ago, so it is better prepared in the event that investment markets falter.”

The ‘conservative’ investment option had the lowest return for the quarter, up 1.5%, and the ‘all growth’ option had the highest, up 2.4%. In August only the ‘conservative’ option produced positive returns. As is often said, past performance is not an indicator of future performance.

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