Super funds likely headed for positive 2016, helped by ‘Trump effect’

Super funds are likely to have a fifth consecutive calendar year of positive investment returns, helped by the ‘Trump effect’, says Chant West.

The median growth fund, with 61-80% invested in growth assets, gained 1.1% in November according to the firm. This means a cumulative 5% return for the first 11 months of 2016 and a currently estimated 6.3% for the year to date.

“With less than two weeks of the year remaining, it’s almost certain the median growth fund will deliver another positive return to follow up the 12.8% recorded in 2012, 17.2% in 2013, 8.5% in 2014 and 5.7% in 2015,” said Chant West director, Warren Chant.

“It would represent the seventh positive calendar year return in the past eight years and the twelfth in the past fourteen,” he said.

“In November, the shock US presidential election victory by Donald Trump dominated headlines. Trump’s victory brings with it uncertainty, but share markets around the world have focused on his plans to stimulate the economy. The US market has risen steadily to record highs, and most other major markets have also gained ground. US bond markets, meanwhile, have slumped in anticipation of increased infrastructure spending and reduced taxes.”

“Last week, the US Federal Reserve finally raised its benchmark interest rate by 25 basis points to a range of 0.50 to 0.75%. This was widely expected, but the surprise was that the Fed also went as far as to forecast three further rate rises over 2017.”

Chant West says that, in November, Australian shares were up 2.8% and international shares were up 2.6% hedged and 4.5% unhedged – due to depreciation in the Australian dollar. Australians REITs were up 0.7% but global REITs were down 1.3%. Australian bonds were down 1.4% with global bonds down 1.6%.

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