Super funds heading for ninth consecutive year of positive returns

Super funds had a “strong” April, following a flat March quarter, setting them up for a ninth consecutive year of positive returns according to Chant West.

The ‘median growth fund’, with 61-80% in growth assets, was up 1.7% for the month of April, taking the returns for the first ten months of the financial year to a “healthy” 7.4%.

“With the cumulative return over the first ten months of the 2018 financial year sitting at 7.4% and markets also up in May so far, growth funds appear certain to finish the year in positive territory for the ninth consecutive time,” said Chant West senior investment research manager Mano Mohankumar.

“Additionally, funds are on pace to beat the typical long-term return objective which is about 5.5% to 6.5%,” he said.

“That’s better than expected and particularly impressive given that we’ve had such a great run over the past eight years with growth funds averaging 9% per annum. Additionally, asset managers have been saying for some time that all asset classes are close to or fully valued and that it’s becoming increasingly difficult to find additional sources of return.”

In April Australian shares were up 3.8%. International shares were up 1.9% in currency hedged terms, and up 2.8% in unhedged terms. Australian REITs were up 4.3% and global REITs up 2.9%.

Retail super funds outperformed industry super funds for the month 1.8% to 1.6%. Industry super funds usually outperform, and still maintain their lead over retail funds over the other time periods reported by Chant West. So far in 2017/18 industry funds are up 8.1% compared to 7.1% for retail funds.

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