After near-record superannuation returns last financial year, super funds are showing no signs of a slowdown in the way they started in July.
Superannuation research houses SuperRatings and Chant West both reported that there were strong performances across funds to kickstart financial year 2021/22.
The SuperRatings figures for July showed that the typical balanced option returned an estimated 1.3 per cent over the month and 18.5 per cent over the year, while the typical growth option also returned an estimated 1.3 per cent for the month and the median capital stable option increased 0.9 per cent.
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Pension returns were also positive in July, with the median balanced pension option returning an estimated 1.3 per cent and 20 per cent over the year, while the median pension growth option returned an estimated 1.5 per cent and the median capital stable option went up an estimated 0.9 per cent.
The figures from Chant West still showed a big month for superannuation funds, but were not quite as positive as the SuperRatings figures, estimating an increase of 1.1 per cent for the month for the typical median growth fund.
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SuperRatings executive director Kirby Rappell explained that his group had researched the effect of switching out of super as a response to market turmoil early last year and it highlighted the importance of seeking advice from your super fund.
“We looked at the impact of switching out of a balanced or growth option and into cash at the start of the pandemic and found that those with a balance of $100,000 in January 2020 and who switched to cash at the end of March would now be around $22-27,000 worse off than if they had not switched,” Mr Rappell explained.
Many of the people who changed their investment options at the start of the pandemic acted independently without first seeking advice, but Mr Rappell said this highlighted the need for people to seek out advice from their fund.
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“Most funds will offer scaled advice for free or at a low cost, with members able to get advice on topics such as contributions, investment options, insurance in the fund and the transition to retirement,” Mr Rappell said.
“For members who want more tailored advice, some funds will offer comprehensive advice that will also take into account your financial assets outside of superannuation.”
He explained that while there was usually a cost for this tailored advice, most funds allowed for it to be deducted from the relevant member’s superannuation account.
Lead researcher for Chant West Mano Mohankumar said July’s strong superannuation result came on the back of the poor performance of the Australian dollar.
“July was another positive month for share markets, with Australian shares rising 1.1 per cent,” Mr Mohankumar said.
“International shares were up 1.7 per cent in hedged terms, but that was boosted to 4 per cent in unhedged terms because of the depreciation of the Australian dollar over the month.”
Mr Mohankumar also said that despite the uncertainty surrounding the COVID situation in NSW there were positive signs ahead for the domestic market, with more vaccines scheduled to arrive and national cabinet endorsing a four-step plan for the easing of restrictions towards the end of the year.
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