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Super fund rally hits 11th month of strong returns


The sharemarket rally is setting up Australians for a richer retirement with median growth superannuation funds returning almost 30 per cent since the start of the pandemic.

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Chant west said the strong returns continued in August for the growth funds with a rise of 1.7 per cent.

“This was the 11th consecutive positive month and took the cumulative return for the first two months of the financial year to 2.8 per cent, Chant West senior investment research manager Mano Mohankumar said.

That spectacular run could be brought to an end this month as global markets have shown signs of contraction as growth fears in China grow.

“The main drivers of growth fund performance are listed shares and they were up again in August,” Mahankumar said.

“Australian shares rose 2.6 per cent over the month while international shares advanced 2.7 per cent in hedged terms and 3.1 per cent unhedged.

“The remarkable rally over the past 17 months has propelled growth fund performance to an impressive 29 per cent since the COVID-induced low point at end-March 2020.

“Not only have we recovered all the losses incurred in the early COVID period, but we’re now sitting about 14 per cent above the pre-COVID crisis high that was reached at the end of January 2020.

“And that has all occurred while the pandemic continues to cause massive disruptions to lives and economies.

Strong company profits have lifted markets in the Eurozone and economies are benefitting from a reopening as vaccination rates climb. Most of the main eurozone nations now have about 70 per cent of their populations fully vaccinated and have reduced or removed most restrictions.

Although half of Australia’s population is restricted by lockdowns he said the vaccine rollouts across the country had gained significant momentum over the past month.

Chant West said over the past 20 years, which included three share major market downturns – the ‘tech wreck’ in 2001–2003, the GFC in 2007–2009 and COVID-19 in 2020 – the median growth fund had returned 7.2 per cent a year, which was still well ahead of the typical return objective.

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