Super funds up for third consecutive month

Superannuation fund investment returns, May 2016, Chant West, super fundsSuper funds have recorded a third consecutive month of positive investment returns, according to superannuation research and consulting firm Chant West.

The median growth fund, defined as 61%-80% growth assets, was up 2.3% in May 2016.

“That takes the return for the first eleven months of the financial year to 4.0%, raising the prospect of a small positive annual return come the end of June,” said a statement by Chant West.

According to the firm the “strong performance” in May was a result of gains in domestic and overseas share markets. Australian shares were up 3.1% for the month, and international shares were up 1.7% excluding currency fluctuations, but down 6% with the depreciation of the Australian dollar.

“While May was an excellent month, we’ve seen much of that gain erased in the first two weeks of June,” said Chant West director Warren Chant.

“That’s largely because investors are concerned about the outcome of the UK referendum on June 23rd and what the implications will be if Britain does decide to exit the European Union. That uncertainty has spilled over into global share markets, and we estimate that the median growth fund is down 1.8% in June to date,” he said.

“Nevertheless, with only two weeks remaining we’re still sitting at about 2% for the 2016 financial year, so a small positive return looks the most likely outcome. If that does occur it will be the seventh consecutive positive year, which is quite remarkable considering the global economic environment has been unsettled for much of that time.”

Retail super funds, up 2.5% for the month, slightly outperformed industry super funds, which were up 2.3% in May. However, industry funds have still performed better over longer time periods, up 5.0% for the financial year to date, compared to 3.7% for retail funds.

As is often said: past performance is not an indicator of future performance.

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