Super funds are set to hit a 9th straight year of positive returns

Vyacheslav Oseledko / AFP / Getty Images
  • The average growth super fund is excepted to end the financial year in two weeks with a 9% return.
  • This is the ninth year of positive returns.
  • Chant West, a super industry analyst firm, says the better performing funds have been those with higher allocations to listed shares and to unlisted assets generally.

Super funds are about to deliver a ninth straight positive return, according to analysis by Chant West.

The median growth superannuation fund (61% to 80% in growth assets) gained 0.4% in May, taking the return over the eleven months of the financial year to 8%.

Financial markets are up so far in June and, with less than two weeks of the year remaining, Chant estimates that the median return for growth funds is sitting at 9%.

The better performing funds have a chance of finishing the year in double digit territory.

“This year’s return won’t reach the heights we’ve seen in some recent years, but it’s important to keep things in perspective,” says Chant West senior investment research manager, Mano Mohankumar.

“Growth funds have had a fantastic run averaging 9% per annum over the past eight financial years so even to be close to that level this year is impressive, especially as asset managers have been saying for some time that all asset classes are close to or fully valued and that it’s becoming increasingly difficult to find additional sources of return.

“The better performing funds this year have been those with higher allocations to listed shares and to unlisted assets generally. A lower exposure to traditional bonds and cash would also have helped greatly, because those have been by far the most disappointing sectors over the year.”

The performance since July 1992, the start of compulsory superannuation, of the growth category median with the typical return objective for that category (CPI plus 3.5% a year after investment fees and tax over rolling five year periods):

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