Super funds at risk of first calendar year investment loss since 2011

Superannuation funds are at risk of their first calendar year of investment losses since 2011.

SuperRatings said November was the third consecutive month of investment losses for superannuation funds. They found the median balanced option (accumulation) was down 0.6% for November, and down 1.2% for the financial year to the end of November – putting super fund members at risk of their first annual calendar year loss in seven years.

Super funds returns for 2018/19 turn negative in October

The financial returns of superannuation funds have turned negative for the 2018/19 financial year due to falls in asset prices in October.

Chant West has the Financial Year to Date return for the ‘median growth fund’, with 61-80% invested in growth assets, at -0.9%. This is down from +2.1% a month earlier, a 3% fall in October.

During the month Australian shares fell 6.2%. International shares were down 6.8% hedged for currency, or down 5.4% unhedged due to falls in the Australian dollar. Australian REITs were down 3.1%, while international ones were down 3.2%. Read more...

Typical SMSF investments continue to outperform larger super funds

The investments SMSFs typically make have continued to outperform those of larger super funds, at least over the short term.

SuperGuard 360 compares the performance of investments SMSFs make, based on ATO statistics, to those of the default MySuper products of large super funds. For the year to August 2018 the SMSF index was up 11.0% before fees and taxes, compared to 10.9% for the MySuper index.

In the 12 months to July 2018 the SMSF index was up 10.5% compared to 10.2% for the MySuper index.

SuperGuard 360 says that three quarters of all SMSFs have total assets under $1 million, and that these funds have higher allocations to cash and less to shares than “larger higher performing SMSFs which hold the majority of SMSF assets”. Read more...

Solid quarter of super fund returns reversed in first half of October

Super fund investment returns were “solid” in the September 2018 quarter, but October may reverse this, according to Chant West.

The median growth fund – with 61-80% invested in growth assets – was up 2.1% in the first quarter of the financial year. But the same fund is down 2.3% already in the first half of October, due to stock market “jitters”.

In the July-September quarter Australian shares were up 1.5% and international shares were up 5.4% hedged for currency and 7.4% unhedged. Australian REITs were up 2%, while international ones were up 0.3%. Read more...

Post-GFC returns a “windfall” for super fund members taking long view

Superannuation funds have accumulated more than $1 trillion in the decade since the start of the GFC, creating a “windfall” for fund members who took a long-term view, says SuperRatings.

SuperRatings calculates that a super fund member who had a balance of $100,000 just before the start of the GFC would today have $193,887 if they stayed in a balanced investment option. Someone who shifted to a capital stable option would have $164,227, $29,610 less. Remaining in a growth option over the decade would have grown the $100,000 to $201,209. Read more...

SMSF investments outperform MySuper for third month running

Investments held by SMSFs have outperformed those of large MySuper funds for the third month running, according to data from SuperGuard 360.

SuperGuard compares the performance of SMSF investments – based on ATO statistics – to the portfolios of MySuper superannuation funds. July 2018 was the third consecutive month in which SMSFs had outperformed MySuper. Though prior to May 2018 MySuper had outperformed for “almost two years”, according to SuperGuard.

For the 12 months to July 2018 the SG360 SMSF Reference Index (SMSFs) returned around 10.5% before fees and taxes, compared to 10.2% for the SG360 Default Index (MySuper). Read more...

SuperRatings expects super funds to do better in rest of 2018

SuperRatings says there is reason to expect superannuation fund investment performance to improve in the second half of 2018.

The firms says the ‘median balanced option’ returned 3.3% for the 2018 June quarter, which is historically the weakest quarter.

SuperRatings found, between 2008 and 2018, that the balanced option returned on average 1.9% in the September quarter, 1.7% for the December quarter, 1.8% for the March quarter and only 0.9% for the June quarter.

“The results are even more exaggerated for higher growth options. For example, options with a pure Australian shares focus have an average return of 2.3% in the December quarter and -0.6% in the June quarter,” said SuperRatings. Read more...

2017/18 an “excellent” year for super fund investment returns

2017/18 was an “excellent” year for superannuation fund investment returns, with the ‘median growth fund’ up a “very healthy” 9.2%, according to firm Chant West.

These returns took super funds to a ninth consecutive year of positive returns – equalling the record – and was well ahead of performance targets.

“Growth funds have now delivered nine consecutive positive financial year returns, averaging about 9% a year,” said Chant West senior investment manager Mano Mohankumar.

“The only other time we’ve seen such a long sequence of positive returns was from 1992/93 to 2000/01. This year’s 9.2% is better than most experts, including ourselves, expected a year ago. It’s also well ahead of the typical long-term return objective for the growth category which is CPI + 3.5%. With inflation running at about 2%, that translates to a target of about 5.5%.” Read more...

Super funds tie record number of consecutive years of positive returns

Superannuation funds are “poised” to equal the record for consecutive years of positive investment returns, at nine years, says firm Chant West.

Early estimates put the returns for 2017/18, for the median growth fund, at an “impressive” 9.2%. This makes a nine year streak of positive returns, the other time this number of consecutive years of positive returns was achieved was between 1992/93 to 2000/01.

“Growth funds will post another strong return for the 2018 financial year and extend their streak of positive years to nine, with some funds delivering double digit results,” said Chant West senior investment research manager Mano Mohankumar. Read more...

Better performing super funds could see double digit 2017/18 returns

Super funds “look certain” to deliver a ninth consecutive year of positive investment returns, according to research and consulting firm Chant West.

The ‘median growth fund’, with 61-80% in growth assets, was up 0.4% for May. This took returns for the first eleven months of 2017/18 to a “healthy” 8.0%.

Mano Mohankumar, Chant West senior investment research manager, says the firm estimates that median growth funds will see returns of about 9.3% for the financial year, with better performing funds having a chance of double digit returns. Read more...