Super funds delivering positive returns despite gloomy outlook

Super funds deliver positive returns in April, but there are dark clouds on the horizon.

Super funds delivering positive returns despite gloomy outlook

Super funds have bucked annual trends and the softening economic outlook by delivering solid returns.

According to leading superannuation research house SuperRatings, funds have delivered solid returns in April and have been boosted by market momentum through early May. Super funds are on track to beat expectations for the June quarter – historically the weakest period of the year.

The typical balanced option return was 1.7 per cent in April, driven largely by gains in Australian and international share markets, bringing the financial year-to-date return to 5.3 per cent. Although these numbers are down on last year’s almost double digit average annual returns, they’re still quite positive, considering the gloomy outlook predicted after large market falls in the December quarter.

Members in a growth option have enjoyed an estimated median return of 2.1 per cent in April. The typical Australian shares option rose 2.3 per cent, while the median international shares option grew by an estimated 3.8 per cent.

Even though returns have been solid in the face of an assumed economic downturn, experts are concerned about whether super funds can maintain their momentum in the final quarter of the 2019 financial year.

“Downside risks to the Australian economy, including weak inflation, falling home prices and tighter credit conditions are taking their toll on consumer confidence, while the return of geopolitical risks in the form of US-China trade negotiations will also contribute to near-term uncertainty,” SuperRatings said in a statement.

“… the June quarter has historically been the weakest for superannuation and tends to be a time when investors take profits and rotate out of equities. While markets have been risk-on for the past four months, there are signs pointing to volatility ahead, along with fears that markets have come too far too quickly.”

While there are reasons to be cautious, there is no guarantee that history will repeat itself.

“The Australian economy has entered the federal election in a relatively vulnerable position, but it’s not all bad news,” said SuperRatings executive director Kirby Rappell.

“We have seen strong performance from super funds since the start of 2019, and there’s no reason why this momentum can’t be sustained through to the second half of the year. But there are certainly risks to the near-term outlook, and members should not expect a bumper year for super returns.

“Super is a long-term game, and those in the accumulation phase should not be too concerned about market volatility or periods of lower performance.”

April’s positive performance has helped to boost total balances over the 10-year period ending 30 April 2019, with $100,000 invested in the median balanced option in April 2009 now estimated to have reached an accumulated $220,332.

The median growth option is estimated to be worth $236,587 over the same period, while $100,000 invested in domestic and international shares 10 years ago is now worth $244,679 and $274,732 respectively.

In contrast, $100,000 invested in the median cash option 10 years ago would only be worth $129,835.

Are you happy with your fund’s performance?

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    COMMENTS

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    floss
    16th May 2019
    10:56am
    Thank god for Industry Fund as apposed to shonky retail funds that are supported by the LNP. and their greedy mates.
    Old Man
    16th May 2019
    11:35am
    Nice one floss, do you care to elaborate and name the shonky retail funds and how they are supported by any political party? It's comments such as yours that do nothing for the conversation except show an unswerving bias.
    ozrog
    16th May 2019
    11:52am
    Old man you don't need proof as its in the level of return. Industry super has by far returned the most.
    Old Man
    16th May 2019
    12:03pm
    You're right ozrog but floss didn't mention the returns of industry funds as opposed to non-industry funds, just a broad smear against them and a political party which is unfounded. I believe that if you have something to say that there should be at least an element of truth in it.
    Greg
    16th May 2019
    12:15pm
    I would think it's obvious, unless you're bias towards the LNP. Your LNP help, support the banks, the big end of town, you know where your mate Mt Turnbull came from.
    MICK
    16th May 2019
    12:22pm
    Correct floss. OM has spent the last year trying to defend Retail Funds despite the figures speaking for themselves AND commentators telling it like it is.
    WHY?????
    Your claim of a smear is a joke OM. That's what you routinely do when you manipulate the figures and then come out with conclusions which are false. Time to give it away. Your government sponsor is DOA and cannot be saved unless it can rig the vote counting.
    Old Man
    16th May 2019
    12:32pm
    Wrong again MICK, I have never championed one group of funds over another. Incidentally, I am in an industry fund. As you know MICK, I challenge any posts that have no substance and floss has made defamatory comments without any support. As to manipulating figures MICK, I have always provided supporting documentation with which you may disagree but that doesn't make the documentation wrong.
    MICK
    16th May 2019
    2:06pm
    You routinely called out Industry Funds OM. As for figures you only ever cherry picked these to turn the argument into a pro government argument whilst also routinely 'proof' from anyone who called you out whilst providing little of anything yourself.
    Sorry to be your worst enemy but you are no saint mate. Neither am I.
    Old Man
    16th May 2019
    3:10pm
    Thanks MICK, I wonder why you have to accuse anyone who disagrees with you as telling untruths. Maybe some of us are better read than you (or maybe you don't listen too closely when your minder is reading things for you) Either that or you go straight to your favourite union bully boy tactic of outright personal abuse.
    MICK
    16th May 2019
    4:19pm
    To repeat what I have consistently said PROVIDE VALID UNBIASED FACTS. This is where you and other trolls lose their credibility. Its the same technique the fossil fuel industry used for many years to try and discredit climate science, but they were caught out with their fudging.
    I don't mind a far right post if it uses 'evidence' which is not from other right wing promoters telling lies. This is where we fall out. Your evidence is dubious or non existent and you frequently rely on comment which is false.
    Sal
    16th May 2019
    4:28pm
    I am quite happy with the performance of my retail fund. My return to date for this financial year is just under 9%.
    MICK
    16th May 2019
    8:44pm
    That's not what the media reports OM. Oh sorry....Sal.
    On the Ball
    16th May 2019
    11:40am
    Thanks for the comment "Floss". I too agree and am in an Industry Fund. Why wouldn't you?
    (Even THE Treasurer Josh Frydenburg has his super in an Industry Fund).
    I wonder if (when?) the LNP regain power on Saturday, will they resume their attacks on Industry Funds? They ARE the funds of Unions you know...
    ozrog
    16th May 2019
    11:53am
    Anything seems to be better than SMFS
    KSS
    16th May 2019
    12:20pm
    "year-to-date return to 5.3 per cent".

    Oh really? Seems I'm in a 'shonky retail fund' then, with my return currently at around 10% and that is since November!
    MICK
    16th May 2019
    12:25pm
    BS. This is a post straight from Liberal Party HQ. I've not seen any retail fund produce that.
    As a further comment lets also not compare an AVERAGE used for Industry Funds to any one figure from Retail Funds. If you are comparing you have to compare apples with apples. What is the average return of the Retail Sector. Don't be bashful!
    KSS
    16th May 2019
    12:35pm
    I guess your abusive posting means you didn't manage the same return then MICK?
    Sundays
    16th May 2019
    1:53pm
    You’re lucky KSS, you must have your money in high growth because the top funds are not Retail funds.
    MICK
    16th May 2019
    2:02pm
    I don't have any superannuation KSS and my post was directed at the distortion you intentionally made. YOU know as well as I and every other Australian that Industry Funds leave Retail Funds in their wake. That's why Turnbull tried to attack Industry Funds.
    KSS
    16th May 2019
    3:01pm
    So you have no superannuation MICK yet feel emminently qualified to denegrate someone who does and whose fund has performed well for them. Wow! Talk about over generalisation.
    KSS
    16th May 2019
    3:04pm
    Sundays, my fund allows the individual (or their representative) to individually select the shares they want to hold. You can buy and sell at will so effectively you are controlling what's in your fund at any given time. And no it is not SMRF it is a retail fund.
    MICK
    16th May 2019
    4:16pm
    Twisting the truth again KSS. What I denigrated was your perversion as you attempted to compare two things which had different parameters. To repeat you cannot compare the performance of any one fund with an average for a different sector. You did this to com readers and I caught you out.
    MICK
    16th May 2019
    12:26pm
    Of course the bad recession and more likely depression coming in the next 12 months will be about the loss of capital rather than earnings. Then we'll see the real gnashing of teeth? It'll be a tough few years after that. Get ready!
    On the Ball
    16th May 2019
    1:05pm
    And Labor inherits a crashing economy and depressed housing sector... Again..
    But the Right will blame Labor anyway.
    And when the US goes to war with China over the trade deals, who's side will we be on?
    MICK
    16th May 2019
    2:04pm
    When Labor was let win the GFC hit shortly after. No accident.
    Now the world is in debt which no nation can recover from and Labor is again going to win.
    There's an old saying which goes 'history repeats itself'. Coming. Let the doubters laugh.
    Old Man
    16th May 2019
    3:17pm
    John 11, 35. I've read it all now, talk about conspiracy theories. John Howard threw the 2007 election and, just to ram home the point, allowed Labor to take the seat of Bennelong because he knew that the GFC was about to hit and let Labor take the blame.

    By all measures, Labor will win on Saturday and Australia's economy will suffer. In advance of this we now read an apology in advance stating that a recession is coming, even a depression and, it seems, that the Coalition is running dead as they know.
    MICK
    16th May 2019
    4:13pm
    No OM, Murdoch got what he wanted.
    Australia's economy HAS suffered under the current government whose only policies were Royal Commissions against Labor and the unions (nothing came of either) and tax cuts for the wealthy whilst ordinary citizens were left stranded on almost zero wage increases when the real inflation rate is high. Don't even get me started on Morrison turning full time jobs into part time and casual jobs.
    Those in know are conversant that a bad slump is coming. It'll be perfect, just like the GFC, to blame Labor for what then happens. Its never the coalition's fault.....

    Lets wait and see. Your baseless claims regarding the economy miss the point that climate change WILL cost a heck of a lot more than the cost of slowing it down. Your lot seem intellectually incapable of digesting that fact despite disasters which are occurring at shorter intervals with every decade which goes by and all time high temperatures which play out every year.

    Johnny Howard? The public had had enough and voted this pariah out. The little squirt is now rolled out of the broom closet at every election. Pathetic!
    BorntoolateRetiredtooearly
    16th May 2019
    8:36pm
    Husband and I retired aged early sixties .....after a lot of paying taxes , going without and saving for retirement we invested our SMSF entirely in Australian shares , living comfortably on a very modest income of $50,000..... $35,000 dividends and $15,000 franking credits . Our income will reduce by $15,000 to total of $35,000. It's all about fairness right ? Where is it fair and equitable when pension recipients can keep their franking credits because they were receiving a part pension with cut off date 28/03/2018 .... my husband misses out by 3 days ....... !
    MICK
    16th May 2019
    8:49pm
    You are not the only people to suffer. Its what happens when policy changes and all of us cannot be winners.
    For the record you are not alone but there are other companies which have a higher payout with no franking credits attached or REITS do likewise.
    Instead of lamenting a change perhaps consider yourself lucky to be supported in your retirement. The trouble with many Australians is its all about them and they'll vote for whoever hands out the most.
    TREBOR
    16th May 2019
    11:20pm
    Delivering solid returns does not necessarily mean they have performed well on the market.... it means that under their 'business' structure, they are happy to provide 'dividends' to 'shareholders' regardless of actual market performance.

    That, in my eyes, is one serious flaw in our current 'superannuation' system, and places all such 'companies' at risk of collapse in a market collapse, including the 'business mode' industry funds........
    TREBOR
    17th May 2019
    8:56am
    They pay during a landslide to 'maintain confidence' same as any other 'company'., in the expectation of offsetting this year's blood-letting with future transfusions from the market... they could equally be bust next week if all goes wrong....

    Under the current structure your money for retirement is not safe. Told yez the 'business mode' is not for superannuation. To quote The Prophet Abbott - Australia is open for business - he forgot to say it was closed for everyone else...

    Guard yourselves for true...

    (No, Igor - I didnt say 'guardia' - you twit....)

    20th May 2019
    8:44am
    I expect the Aussie sharemarket will continue to thrive as a result of the lnp remaining in power


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