Global volatility not enough to stop super fund returns from soaring

Australian superannuants have reason to be pleased with their super fund returns.

Global volatility not enough to stop super fund returns from soaring

Global financial volatility was not enough to stop superannuation fund returns from soaring, with returns so far this financial year crashing through the 10 per cent barrier.

Australian super funds have been the beneficiary of a boost from local and international shares, a fall in the Australian dollar, a rise in full-time employment rates and expansion in the manufacturing sector.

Median balanced-option returns have held steady. Even a 300-point loss on Wall Street in mid-May hasn’t slowed the momentum of super fund returns, despite a mixed month in April. Australian and international shares have been solid performers so far this the financial year, with returns of 15.3 per cent and 15.6 per cent respectively. However, despite all this optimism, significant economic risks remain.

median balance returns australian super 2017

“Economic indicators remain robust, although weaker inflation figures may be of some concern to investors as well as central banks,” said SuperRatings Chairman Jeff Bresnahan.

“We have not seen the strong boost in confidence many have been hoping for, but neither have we seen any sign of a sustained pullback or dramatic loss of momentum. Despite the fact that significant risks remain, including in the housing market, the outlook for 2017 remains somewhat positive.”

“It would be a great result to achieve a double-digit return for the financial year, but we still have a bit longer to go,” said Mr Bresnahan.

“Volatility has begun to increase in line with continued political uncertainty globally, and market momentum is positive. However, investors should be careful not to under-price risk in this environment. In other words, we should not get too complacent.”

“Interestingly, equity market gains have coincided with a fall in yields in major markets, as well as a fall in the US dollar,” said Mr Bresnahan.

super returns table

Longer-term returns remain on target, with the seven-year return sitting at an estimated 7.8 per cent per annum. The 10-year return figures are a little less optimistic at 4.8 per cent per annum, although those numbers are skewed by the Global Financial Crisis, which occurred during that period.

Read the full report at SuperRatings

Has your super fund soared? Are you happy with your returns?

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    COMMENTS

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    Old Geezer
    26th May 2017
    10:33am
    If super funds are doing that well and most SMSFs do better what must they be earning?
    MICK
    26th May 2017
    10:51am
    Look at what house prices are doing in Sydney. That's where most SMSFs have their money.
    Of course if there were to be a crash then the smiles and lifestyle might evaporate very quickly. So far so good though.
    thommo
    26th May 2017
    1:55pm
    The old geezer - the proverbial sceptic...just like the proverbial wet blanket...wants to spoil things for everyone else..
    Farside
    26th May 2017
    2:00pm
    and your point Thommo is what exactly? OG simply put it out there how much the SMSF might be earning if super funds are cleaning up.
    Old Geezer
    26th May 2017
    4:53pm
    Mick house prices in Sydney pale into insignificance compared to some of the returns for SMSFs for the last 20 years. House prices in Sydney are still only about their long term average.
    Old Geezer
    26th May 2017
    5:00pm
    Example of Sydney house prices. I bought a house in Sydney in 1992 for $200,000 today it is worth $800,000. That's a return of 5.6% over 25 years.

    Gee I'm glad I didn't invest in Sydney housing in a big way.
    ex PS
    29th May 2017
    5:02pm
    An average return of 5.6% over the last 25 years is not bad considering that this is above what would have been paid in rental costs. What we are considering is the fact that $600,000.00 has been made less maintenance costs in that period. Not many Super funds would have returned that. And the home owner would now be rent free and would have up to $400.00 a week more disposable income tax free depending on the location of the property.
    I can not see how paying rent versus owning your own property is cost effective.
    I was in my Super for twenty years and salary sacrificed for the last five and the fund did not make that kind of money, and this was rated one of the best super funds in the state.
    Old Geezer
    29th May 2017
    6:05pm
    Let's take CBA issued at $5.40 in 1991 now worth $79.06 which is 10% pa plus it has paid dividends of about 7-8% pa as well. Better than money in a house with rent return of 2% and growth of 5.6%.
    ex PS
    30th May 2017
    9:21am
    Yes let's do that O.G, and let's consider how you raise enough capital to buy enough shares to make the same money? Let us also consider how you pick the right shares, it is not so easy to pick good shares before you know which ones are going to perform well, much easier to pick them with hindsight.
    If you know anything about the market you know that there is always a down turn where shares will return nothing or even go into the negative.
    You have also missed my point, why would you but a house for someone else to live in and then pay rent to someone else, if you live in the house you are paying off, you effectively living rent free and investing your money into a Asset. You are always stating that negative gearing is a mugs game so why would you now advocate paying for a house and renting it out as an investment strategy. Most people do not buy a house to rent out.
    adbob
    26th May 2017
    11:29am
    Don't forget that it's all denominated in Aussie dollars.

    The AUD is now worth less than 3/4 of what it was worth at its peak a few years ago.

    Most of the big miners have operations all over the world but they are denominated in AUD on the ASX. The lower the AUD goes the higher their share price goes, other things being equal.

    The companies that rip off Australian consumers continue to do well - especially with their mates in power. the banks obviously (not forgetting their "financial advice" arms) - the big supermarkets too but they start to come under pressure from overseas competition - make that competition full stop.

    The Australian economy is a Ponzi scheme. I don't see the new "clever country" economy developing the way we were promised. There are certainly a few sunrise industries but they are not half big enough to make up for what we've lost - or rather thrown away.

    We can't even build our own Boondoggle Class submarines any more - we have to import them from France or Japan - countries whose ecomomies, we are endlessly told, are stagnant while ours, we are told, is booming.

    Never mind - enjoy the party while it lasts - but get ready for trouble when the music stops.
    MICK
    26th May 2017
    11:47am
    Pretty well on the money adbob. It goes without saying that the current government, like the Abbott government before it, are lying bastards who have been pushed into power because the money interests control the media and groom their side of politics so that they get what they want, TAX CUTS...for themselves. Sad that many voters cannot see this for what it is and listen to the litany of lies which just keep coming thick and fast.

    Our country is certainly under attack from within. First we import mostly everything so no wonder we are going broke. Then there is the biggest lie of all: :jobs and growth". There is no jobs growth. All that is happening is that for every full time job we are seeing 2 new part time jobs. Australians cannot live off part time jobs but of course the rich make sure they have a proper income for themselves.

    The term "clever country" has been coined to fool the same folk who voted for the current government, the mentally challenged. Australia has become a GREEDY country infested by the vermin at the top who look after themselves. Coalition governments now no longer look at the big picture. Nor do they consider the interests of the country as a whole. Their sole purpose is to give everything they can to the top end and turn the bottom into working slaves. The latest call from the Business Council of Australia to slow down wage increases is the next step at a time when wages are at their slowest growth rate in probably half a century. Of course the top is growing at an unprecedented rate. As I keep saying this is a transfer of wealth to the top better known as Class Warfare.

    The music is going to stop worldwide. God help the rich when it does because revolution may be thought to be something from the past but hunger and forcing citizens to live in tents whilst the top parties like there is no tomorrow will not go unpunished. It is a matter of when not if.
    Farside
    26th May 2017
    2:10pm
    no argument there Adbob and Mick, but to be fair our current circumstances include more than a decent share of own goals. In many ways we are our own worst enemies and without a major change in attitude it is inevitable our living standards are in for a shock.
    Alexii
    26th May 2017
    3:05pm
    You are both spoton, Adbob and Mick. part of that transfer of wealth is the government aim for retirees to have virtually nothing left at the end of their lives so there is nothing to pass on to their kids. That way, our kids haven't got much chance of building their wealth either. It ensures the lower income people remain relatively poor and then will have nothing left to pass on to their kids and so on. So the rich stay rich (and get richer) while the poor stay poor and get poorer.
    ex PS
    30th May 2017
    9:27am
    Poor people are easier to control, that is why this government and its camp followers are trying to make sure we leave our kids nothing to help them out.
    floss
    26th May 2017
    12:04pm
    Short term thinking will result in short term gain.Due to bad policy decisions long term this country will pay the price.Tinkering with super and changing the rules has made this form of investment not very attractive .One must ask why privatise any revenue producing utility.
    MICK
    26th May 2017
    12:52pm
    The bigger picture comes into focus when you follow the money trail. Coming from one section and going to another with a heap of waste and bad policy in the middle.

    26th May 2017
    3:37pm
    Well, please forgive me for being so selfish but our super fund is paying above the compulsory percentage of what we are obliged to take each month. If this continues, we won't run out of funds which is the most concerning thing for most retired people.
    Old Geezer
    26th May 2017
    3:43pm
    I thought you nominated how much you wanted to take out at or above the minimum. I do with my SMSF.
    Anonymous
    26th May 2017
    4:36pm
    Gee Old Geezer, your input is getting tiresome. Your comment suggests that what I have posted is wrong when, in fact, it is totally correct. Should I have been a little clearer and said that we have actually nominated to take out the minimum as required by legislation?
    Old Geezer
    26th May 2017
    4:51pm
    Use of a different word to paying ie earning would make more sense then.

    My SMSF has been earning more than I take out since I turned it into a pension fund years ago. Since I started my SMSF it has been doing a little better than Sydney house prices too.
    Anonymous
    28th May 2017
    6:30pm
    My husband's fund is the same OG...he has more in there than he started out with about 10 years ago.
    floss
    26th May 2017
    3:49pm
    Sorry Old Man super does go into the red.
    Anonymous
    26th May 2017
    4:32pm
    I agree floss, all I'm saying is that our super has been doing OK. I don't want to start an argument about one super fund as opposed to another or SMSF pros and cons. My statement was selfish and for that I apologise.
    mike
    27th May 2017
    9:45pm
    What garbage. Since bastard Morrison hit the major banks, firstly with the increased cash reserve levels ( money is expensive, and to have large reserves just lying about is costly ) then the $6.9billion theft, well MY super has plummeted. Most supers have invested in the major banks. Our kids mortgages will surely go UP. And all the mum and dad investors who worked and bought shares, well bad luck to them, and FOR WHAT!!, so bastards like Turnbull and Morrison can stuff their back pockets, or Bitch Bishop can fly VIP to Perth to attend another dog and pony show, or fly 29 times to the Gold Coast to buy an investment property. Our Super, our standard of living plummets, but the bastards rob from the workers and the retirees to fill their own back pockets
    mike
    27th May 2017
    9:45pm
    What garbage. Since bastard Morrison hit the major banks, firstly with the increased cash reserve levels ( money is expensive, and to have large reserves just lying about is costly ) then the $6.9billion theft, well MY super has plummeted. Most supers have invested in the major banks. Our kids mortgages will surely go UP. And all the mum and dad investors who worked and bought shares, well bad luck to them, and FOR WHAT!!, so bastards like Turnbull and Morrison can stuff their back pockets, or Bitch Bishop can fly VIP to Perth to attend another dog and pony show, or fly 29 times to the Gold Coast to buy an investment property. Our Super, our standard of living plummets, but the bastards rob from the workers and the retirees to fill their own back pockets
    ex PS
    29th May 2017
    8:32am
    mike, doesn't your Super have an option for you to invest in certain areas of your own choice? Most of mine is invested in low risk options and returns an average of 7%, but the part invested in International shares returned about 21% last year.
    Like anything the bigger the profit the bigger the risk, that is why I only invest 20% of my fund in high risk areas.

    28th May 2017
    6:28pm
    I am happy with the returns on my industry fund this year.
    ex PS
    29th May 2017
    8:34am
    I am also happy with mine, a combination of Managers, Members and Union Reps on the board seems to work quite well and keep rorting to a minimum. I guess they have hit the right balance.