Super fund returns retreated in September as investors grew increasingly nervous and risk-averse, according to analysts Chant West.
However, the median growth fund (61% to 80% growth assets) posted a respectable 1.7% gain for the September quarter.
Listed shares and property markets, the main drivers of growth fund performance, had mixed results over the quarter.
Australian shares fell 0.6%, partly as a consequence of falling commodity prices but also due to international investors seeking to repatriate their money to the safe haven of bonds.
Warren Chant of Chant West said fear and volatility returned to global markets in September, and that mood had only deepened in October so far.
“For the first two months of the financial year investors had been reasonably sanguine about economic prospects, preferring to focus on the recovering US economy and downplaying events elsewhere,” Chant said.
“The jitters started to develop, however, when it became increasingly clear that Europe is barely treading water and risks slipping back into recession and/or deflation.
“Shares have the greatest influence on growth fund performance, and as a result we estimate that the median growth fund return for the financial year to mid-October is close to zero.
“Naturally this is disappointing, but it is far too early to tell whether this is just a pause for breath or a complete change of direction.”
Chant says growth fund members need to remind themselves that they have just experienced five positive annual results, with four of them near or above double digits.
The chart below compares the median performance for each category in Chant West’s multi-manager survey, ranging from All Growth to Conservative.
The one, three and five year returns reflect the strong performance of listed shares and property. The more aggressive fund categories, which have a higher proportion invested in those assets, have produced the best performance.
The seven-year returns, however, are still weighed down by the GFC effect.