Super fund returns saved by the Santa rally in the closing days of 2016

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The returns from Australia’s superannuation funds, battered by a see-sawing market in 2016, made a strong run in the closing days of 2016.

The Santa rally delivered 2.1% in the final month of the calendar year, taking the annual return for the Median Balanced Option, the setting used by most Australians, to an estimated 7.2%.

This is slightly below the 7.7% a year average of the last seven years. On the stock market, the ASX200 index is more than 7% higher now than at the start of 2016.

Industry analysts SuperRatings say the return was achieved despite the market’s continued concerns about low global growth

“If I had to sum up 2016, I would say it has been a year of extremes,” says SuperRatings chairman Jeff Bresnahan.

“Super funds struggled at the start of the year, with many posting significant losses, but recovered as markets stabilised.

“Of course, we then had Brexit and the corresponding rebound, a bearish October ahead of the US election, and then a big lift to end the year, led by equities.”

This chart shows the annual returns achieved by super funds for each calendar year over the past ten.

Despite volatility in 2015 and 2016, annual returns appear to have stabilised since 2011, with the rolling five-year return hitting 9.5% and funds generating the 5th consecutive year of positive returns.

However, the 10-year return is 5.2% a year, showing the impact of the GFC.

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