Super funds set for fifth year of growth

Posted by Anton Murray Consulting on 23 Jun, 2014

Scott Hodder

Super funds are set for a fifth consecutive annual return after another positive month in May, according to Chant West and SuperRatings.

With only one month remaining, the cumulative return for this financial year stands at 12.6 per cent, according to research by Chant West.

SuperRatings’ founder, Jeff Bresnahan, said “The 2013/2014 financial year is shaping up to deliver another year of strong returns for members of Australian superannuation funds.”

Chant West director Warren Chant said the markets have been mixed for the month of June, “but so long as nothing dramatic happens the median return will be well into double digits”.

Mr Chant said that “this year’s result comes on the back of positive returns of 10.4 per cent in 2009/2010, 9.2 per cent in 2010/2011, and 15.6 per cent in 2012/2013”.

Mr Chant said this growth is very strong considering inflation has been on hold at 2.5 per cent by the Reserve Bank of Australia since August 2013.

“We’re expecting a range for the growth fund category between nine and 15 per cent, so that is pretty strong when you consider inflation is running at less than three per cent,” said Mr Chant.

Mr Chant said global shares and property were the main drivers in May, with “international shares gaining 2.3 per cent in hedged terms and 1.5 per cent on an unhedged basis, while international property was up 3.2 per cent”.

According to Chant West, since the GFC low point at the end of February 2009, growth funds have advanced 70 per cent and now stand 25 per cent above their pre-GFC high, reached at the end of October 2007.

“This strong bounce-back should serve as a reminder of how dangerous it is to attempt to ‘time’ the market,” said Mr Chant.

“If you lost your nerve during the GFC and switched to a more conservative strategy you’d have crystalised your losses and missed out on this strong recovery.”

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