Golden years: Super funds likely to hit 12 per cent return after a decade of positives
Superannuation funds were likely to produce a return of 12 per cent for the year which would signal the 10th consecutive year of positive returns, according to industry analysts Chant West.
Super funds fell by an average 3.3 per cent for the year
The median growth fund had risen.3 per cent in November which drove the return for the first 11 months of the year to 11.7 per cent. December had also been positive so far and with two weeks left in the year returns were sitting above 12 per cent.
Chant West senior investment research manager Mano Mohankumar says the 2021 result would provide further proof of super’s resilience and its ability to grow fund members’ savings regardless of economic disruptions.
“Barring a last-minute capitulation, we’re on track for yet another positive result for super fund members – the 10th in succession,’’ he said.
“That’s a remarkable achievement when you consider that the past two years have been fraught with social and economic disruption as a result of the Covid pandemic.
“This year’s result represents a continuing reward for those members who’ve remained patient and trusted their funds to weather the crisis.
“Who would have thought, at the low point in late March 2020, that growth funds would have surged a staggering 30 per cent over the subsequent 20 months?
“That tremendous rally sees them sitting nearly 15 per cent higher than the pre-Covid crisis peak that was reached at the end of January 2020.’’
He said growth assets had experienced a strong recovery since the end of March last year and younger members of retail life cycle products – those born in the 1970s, 1980s and 1990s – had either outperformed or performed broadly in line with the MySuper Growth median over periods longer than three months.
“However, they’ve done so by taking on significantly more share market risk. On average, these younger cohorts have at least 20 per cent more invested in listed shares and listed real assets than the typical MySuper Growth option.
“The older cohorts (those born in the 1960s or earlier) are relatively less exposed to growth assets so you would expect them to underperform the MySuper Growth median over longer periods. Capital preservation is more important at those ages, so while they miss out on the full benefit in rising markets, older members in retail lifecycle options are better protected in the event of a market downturn.’’
