DateNovember 20, 2018
Super members have suffered their second straight month of negative returns and are now firmly in the red for the financial year as market volatility and political uncertainty weighs on market sentiment. Nonetheless, super members remain well ahead over the long term with $100,000 invested ten years ago in any number of funds still worth more than twice as much today.
The latest data from superannuation research house SuperRatings reveals a decline of -3.1 percent in the month of October for members invested in the median Balanced option. However, because of stronger performance in July and August the losses for the financial year to date (FYTD) are lower at -0.9 percent. The decline has been more severe for members invested in the median Growth option, suffering a decline of -4.1 percent in the month of October and -1.5 percent FYTD.
Interim results only. Median Balanced Option refers to ‘Balanced’ options with exposure to growth style assets of between 60% and 76%. Approximately 60% to 70% of Australians in our major funds are invested in their fund’s default investment option, which in most cases is the balanced investment option. Returns are net of investment fees, tax and implicit asset-based administration fees.
Members who had directed their investments towards Australian and international equities have experienced even greater declines with the median Australian Shares option down -5.7 percent in October and -4.4 percent FYTD, while those in the median International Shares option suffered a decline of -5.8 percent in October but just -1.1 percent FYTD. The performance of the International Shares option reflects the divergence in domestic and international markets over recent months.
Growth of $100,000 invested over 10 years to 31 October 2018
Interim results only
When considered over the longer term, the recent selling will not significantly diminish the stellar performance achieved by super funds over recent years. An investment of $100,000 in the median balanced fund 10 years ago would now be worth around $193,751 as at the end of September 2018. In the best performing balanced fund over that period, the same $100,000 investment would have doubled in value to $213,156.
Best and worst performing balanced options to 31 October 2018
“The market rally gave way to a rolling bear market in October, and despite an attempted recovery, this month remains under significant pressure,” said SuperRatings Executive Director Kirby Rappell. “Investors are concerned that earnings momentum is slowing and that valuations, especially in some growth sectors, are too high. Add to this significant uncertainty globally, whether it’s renewed trade tensions between China and the US or the continuing Brexit saga in the UK, and it looks like volatility will be a more permanent feature of markets heading into 2019.”
Warnings: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to “General Advice” (as defined in the Corporations Act 2001(Cth)) and based solely on consideration of the merits of the superannuation or pension financial product(s) alone, without taking into account the objectives, financial situation or particular needs (‘financial circumstances’) of any particular person. Before making an investment decision based on the rating(s) or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances, or should seek independent financial advice on its appropriateness.
If SuperRatings advice relates to the acquisition or possible acquisition of particular financial product(s), the reader should obtain and consider the Product Disclosure Statement for each superannuation or pension financial product before making any decision about whether to acquire a financial product. SuperRatings’ research process relies upon the participation of the superannuation fund or product issuer(s). Should the superannuation fund or product issuer(s) no longer be an active participant in SuperRatings research process, SuperRatings reserves the right to withdraw the rating and document at any time and discontinue future coverage of the superannuation and pension financial product(s).
Copyright © 2018 SuperRatings Pty Ltd (ABN 95 100 192 283 AFSL No. 311880 (SuperRatings)).
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