Super returns will rally after bumpy year

super returns will bounce back

It’s been a bumpy year for super returns, but there’s reason to believe better times are on the way, experts say.

For most of the time the superannuation system has been in place, Australians have grown used to watching their balance steadily grow year on year.

This year, however, just about all super funds ended the financial year in negative territory. Things haven’t improved since then either, with September figures from SuperRatings showing the median balanced option was still down 5.7 per cent for the year and 3.1 per cent in September alone.

Camille Schmidt, market insights manager at SuperRatings, told The Sydney Morning Herald the results would strike fear into the hearts of many pre-retirees.

Read: Big super funds ‘cashing in’ on positive reviews?

“This is foreign territory for a lot of people,” she said.

“I think that’s what’s adding to the anxiety around the drops in their balance because it’s just not something that you would expect to see based on the bull market that we’ve had to date.”

Between the pandemic, global supply chain issues, rampant inflation, rising interest rates and the war in Ukraine – it’s understandable that super balances are taking a hit.

Funds are making strategic moves to hold more cash reserves and attempting to buy assets while they’re cheap – ‘buying the dip’ as they say.

Read: Could ‘buying the dip’ boost your retirement income?

But super industry experts say the continuing volatility will end – eventually – and positive returns will come again.

John Pearce, chief investment officer at UniSuper, says the economic downturn is providing his fund with the perfect platform for a strong recovery by weeding out what he calls ‘excesses’ in the economy.

“We’re holding record levels of cash and we’re seeing some interesting opportunities,” he says.

“We believe the next rally will be on a much more solid footing than previous rallies, because we’re seeing obvious excesses in the market being eliminated.”

Read: What to consider before switching super

Mr Pearce also says stock market returns are “at levels that historically have proven to be pretty good entry points for long-term investors” and that UniSuper is using some of its extra cash to take advantage of that.

The sentiment was backed by Mano Mohankumar, senior investment research manager at ChantWest. He says super fund members need to remember that superannuation is a long-term investment and that relatively short-term blips should be ignored.

“Despite the challenging backdrop over the past two-and-a-half years, the median growth fund is more than 10 per cent ahead of the pre-COVID high that was reached at the end of January 2020,” he says.

“This should be comforting for fund members. More importantly, funds are continuing to meet their long-term return and risk objectives.”

Disclaimer: All content on YourLifeChoices website is of a general nature and has been
prepared without taking into account your objectives, financial situation or needs. It has been
prepared with due care but no guarantees are provided for the ongoing accuracy or
relevance. Before making a decision based on this information, you should consider its
appropriateness in regard to your own circumstances. You should seek professional advice
from a financial planner, lawyer or tax agent in relation to any aspects that affect your
financial and legal circumstances.

How has your super balance fared in the past year? Are you (or were you) planning on retiring soon? Let us know in the comments section below.

Written by 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.

Leave a Reply

GIPHY App Key not set. Please check settings


asset allocation represented in pie graph

Good asset allocation is the key to a great retirement

qantas has won a CHOICE Shonky award

Qantas flies away with Shonky award