Super funds may have scrambled to stay ahead of a volatile market in the first half of the calendar year, but SuperRatings says fund members can expect a much better second half of 2018.
While many super funds performed admirably in the first half , others struggled to recover from a global selloff earlier in the year. Still, median balanced option funds ended the financial year on a high. More remarkable, is that the June quarter produced good results in what is typically the weakest three months for superannuation.
“Luckily, this year investors forgot the old adage of ‘sell in May and go away’,” said SuperRatings chief executive Kirby Rappell.
“Instead we saw a strong recovery which ended up producing a very positive June quarter for superannuation.”
And more good news is on the way, according to SuperRatings’ analysis. If history is anything to go by, super funds have historically recorded higher returns in the second half of a calendar year.
“Members can anticipate a bit of a kick in coming periods, although this is conditional on the management of some downside risks to the Australian economy, as well as the broader global growth picture,” said Mr Rappell.
While funds that invested in Australian shares may have performed well over the last (financial) half, there is, according to SuperRatings, a chance that the stock market may experience softer growth going forward. That is because the market is dominated by banks, which may suffer negativity in the wake of the Royal Commission into Financial Services.
“The Australian economy has a bit of extra baggage, including low wage growth and a cooling property sector, which could impact sentiment, but overall our outlook is positive,” said Mr Rappell.
Despite this softer outlook, Australian funds are buoyed by the fact that they’ve added $150 billion to accounts over the past financial year, and both funds and members are hoping for this positive trend to continue.
Over the past 10 years, super funds with a median balanced option added more than 85 per cent to savings, while funds with growth options grew by over 90 per cent.
“This is despite the significant drawdowns members experienced during the Global Financial Crisis, with balanced options taking nearly two years to fully recover,” according to SuperRatings analysis.
The best performing fund with a balanced option for the year to 30 June 2018 was HOSTPLUS, returning 12.5 per cent, with AustSafe and AustralianSuper close behind at 11.4 per cent and 11.1 per cent respectively.
How did your super fund perform over the past financial year?