Super funds bounce back after slow start to the year

It’s a new financial year, so it’s time to take stock of your superannuation, and it turns out June was a good month for your retirement plans. 

Financial researcher Lonsec said super funds delivered stronger-than-expected returns for June. It’s a timely upward trajectory after the falls at the start of 2024 and inflationary pressures. Superannuation research house SuperRatings – a division of Lonsec – estimates that the median balanced option returned 0.7 per cent for June, bringing the return for the year to 30 June 2024 to an estimated 8.8 per cent.

SuperRatings reported that capital stable options, which hold more traditionally stable assets such as cash and bonds, returned 0.6 per cent for June.

For a quick explainer on super investment options and choosing the right one for you, visit MoneySmart here.  

Strong turnaround

SuperRatings executive director Kirby Rappell welcomed the news.

“Fund returns have made a strong turnaround since November 2023 to deliver a second year of above average returns,” he said.

“Top performers will be handing members double digit returns for the year, reinforcing superannuation funds’ ability to deliver a competitive outcome for everyday Australians.”

Technology shares in the US and bank shares in Australia have driven this year’s outcomes, and funds with higher levels of investments in these assets have done well over the year. 

“While the ongoing cost of living pressures are hard to ignore, superannuation continues to support long-term financial outcomes, with most funds managing to keep performance in line with the typical consumer price index plus 3.0 per cent investment objective over 10 years.”

The US share sector estimated returns of 17 per cent as tech and associated industries sent shares to ‘unprecedented’ highs. Funds were also well supported by the Australian share market which Lonsec said made an estimated 11 per cent return for the sector.

Tougher year

“We expect all major asset classes to contribute positively to fund returns for the year, although the fixed interest and property sectors had a tougher year and are expected to make the smallest contributions,” Mr Rappell said. 

Lonsec recommends investors consider exploring long-term strategies for their superannuation. It also suggests investors educate themselves on market conditions, their investment options and always check their annual super statements. 

“With the share market driving another strong year of returns, members may be tempted to seek out higher exposure to these assets,” Mr Rappell said. 

“However, risks remain, particularly around the trajectory for inflation in Australia and geopolitical factors such as ongoing wars and the upcoming presidential elections in the US. 

“Members should be prepared to see their balances fluctuate and consider seeking professional advice before making changes. 

“For those who are not approaching or in retirement, keep in mind that current market movements are not likely to be what you are thinking about when you retire 20 or 30 years from now.”

Do you regularly review your investment options? Why not share your experience in the comments section below?

Also read: ATO super fraud threatening retirement balances

Jan Fisher
Jan Fisher
Accomplished journalist, feature writer and sub-editor with impressive knowledge of the retirement landscape, including retirement income, issues that affect Australians planning and living in retirement, and answering YLC members' Age Pension and Centrelink questions. She has also developed a passion for travel and lifestyle writing and is fast becoming a supermarket savings 'guru'.
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