Despite the drop in June superannuation funds have delivered a “strong result” for the 2014/15 financial year, according to superannuation research firm SuperRatings.
The ‘median balanced’ super fund investment option returned 9.7% for the 2014/15 financial year, with a -2.1% return for the month of June.
“Although market volatility in June prevented most funds from producing double-digit growth for the year, the 9.7 per cent return is still an impressive result,’’ said SuperRatings founder Jeff Bresnahan.
“This is the sixth consecutive year of positive results, with annual returns during this period averaging 9.2 per cent.”
Australian Shares were only a “modest contributor” to returns, with “strong” contributions from Listed Property, according to SuperRatings. But the “main contributor to this year’s strong result” was International Shares, with most Balanced Options holding 20%-30% of this asset class. The median International Shares option increased 19% in the 2014/15 financial year, though “this performance was boosted by a significant fall in the value of the Australian dollar.”
“The majority of superannuation funds hedge less than 50 per cent of their international shares exposure against currency movements. This meant the 18.5 per cent fall in the Aussie dollar against the US dollar during the 2014/15 financial year helped boost returns for superannuation funds” said Mr Bresnahan.
“The Greek debt crisis sent most share markets in to a tailspin in June, including Australia. Markets were further spooked by an already volatile Chinese share market. Ongoing uncertainty within Australia’s economy added to the bearish mood of investors, causing most major asset prices to fall and resulting in a 2.1 per cent loss for the median Balanced Option in the month of June,” he said.
“Although super funds lost ground in June, the diversification of most funds once again helped cushion even greater losses from most major asset classes.”
SuperRatings warns that “past performance is not a reliable indicator of future performance.”
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