Super funds post positive returns in July

After a less-than-stellar end to the last financial year, super funds posted a strong recovery in July.

New analysis from research house SuperRatings estimates the median balanced super option delivered a return of 3.1 per cent last month.

It estimates the median growth option rose by 3.5 per cent, while the median capital stable option increased by 1.9 per cent.

Pension returns also increased, with the median balanced pension option up an estimated 3.3 per cent. SuperRatings estimates the median growth pension option rose 3.9 per cent and the median capital stable option 2.1 per cent.

Read: Super still outperforming most asset types

The positive result comes amid turbulent economic conditions, which has seen the inflation rate jump to 6.1 per cent. Last month, the Reserve Bank of Australia (RBA) lifted the official cash rate to 1.85 per cent in a bid to counter inflationary pressures.

The lift in returns comes after a horror end to the financial year, with just three super funds managing to turn a profit.

The bounce back is being driven by Australian and international equity markets, in particular the S&P/ASX 300 Information Technology Index, which posted a return of 15.4 per cent last month.

Kirby Rappell, executive director of SuperRatings, says the result shows that superannuation is a long-term investment, which will be subject to ups and downs.

Read: ATO data reveals big shortfall in average super balances

“We’ve been emphasising the importance of focusing on the long term and amid the recent market uncertainty it’s understandable that people have been concerned about the ups and downs in their account balances,” Mr Rappell says.

“This year we have seen the ongoing challenges of COVID-19 coupled with a challenging global economic environment driving the volatility.”

Mr Rappell cautions against trying to beat economic conditions by moving your money into riskier or more conservative investment options depending on the economic conditions of the day.

He says members who switched options after the negative EOFY results would now be missing out on the recovery.

Read: Industry expert floats plan to increase preservation age

“We continue to highlight the importance of setting your long-term investment strategy and the performance over the last month shows the perils of trying to time the market,” Mr Rappell says.

“It is pleasing to see a strong recovery over the month of July demonstrating the resilience of super funds and their ability to navigate the uncertain investment environment.

“While we are likely to see bumps ahead, the long-term trend for super funds has remained strong and steady.”

How did your super fund perform in July? Did you move your super into a different option after the EOFY results? Let us know in the comments section below.

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Brad Lockyer
Brad Lockyer
Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.
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