Super funds have “good chance” of double digit returns in 2019

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The outlook for super fund returns for the rest of 2019 is positive, with firm Chant West saying funds have a “good chance” of finishing the calendar year with double digit returns.

The ‘median growth fund’, which has 61-80% invested in growth assets, was up 0.4% in the month of October, and up an “impressive” 12.8% for the 2019 calendar year up to October.

So far in November, the median growth fund is sitting at 14.3% for the calendar year.

Chant West senior investment research manager Mano Mohankumar said 2019 has been a “terrific year” for super funds.

“The performance so far is significantly better than what we could have expected at the start of the year. It’s certainly a major turnaround from the December 2018 quarter when growth funds lost 4.6% and investor sentiment was decidedly negative.”

However there was a note of caution about future returns.

“Even if super fund performance retreats in the remaining six weeks of the year, a positive return for the year would represent the 10th positive calendar year in the past eleven. That’s great news for super fund members but we caution them not to get carried away. The returns that funds have delivered since the end of the GFC really aren’t sustainable over the long term, and we expect more challenging times ahead. Given the tremendous run investment markets have had for over a decade, most asset sectors are fully valued or close to it. The global economic backdrop is still dogged by uncertainty.”

In October, Australian shares were down 0.4%, while international shares were up 1.9% hedged for currency, but only up 0.4% unhedged – due to a rise in the Australian Dollar. Australain REITs were up 1.4%, and global ones up 1.8%.

SuperRatings has its SR50 Balanced index, with 60-76% growth, up 12.5% so far in 2019.

“This year has provided further solid evidence of the ability of super funds to deliver for their members through a challenging market environment,” said SuperRatings Executive Director Kirby Rappell.

“Whether it’s the US-China trade conflict, the weaker economic outlook, falling interest rates, or the rolling Brexit saga, there’s been a lot for funds to take in. This has been a real test of their discipline and ability to manage risks on the downside. Growing wealth in this environment while protecting members’ capital is a tall order, but they have managed it well.”

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