Median balanced funds return 0.6%

Median balanced superannuation funds returned 0.6 per cent in August, with local shares assisted by a healthier commodities market, according to SuperRatings.

The research house found Australian stocks suffered a mixed earnings season and the US market remained on edge, whilst super funds had been focused on managing any breakout in volatility.

SuperRatings said if volatility increased a greater range of returns was expected despite most funds recording strong outcomes in recent years.

SuperRatings chair, Jeff Bresnahan, said: “Super funds have enjoyed a remarkable run in recent years, but members should be reassured that funds are increasing their focus on downside protection”.

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“Members have seen a significant increase in their balances in recent years, but most funds are extremely aware that this does not mean they should take their focus off protecting these increased nest eggs” he said.

“…we are living in a changing world, with higher levels of household debt becoming the norm for many Australians. This is increasing the importance of super as a driver of household wealth, with greater reliance on super for many, particularly for those members that are part of generation rent.

“Funds continue to perform well against a CPI+3 per cent objective over one, three, five, and seven years, although the impact of the global financial crisis (GFC0 remains evident in 10-year outcomes.”

The SuperRatings report found the Australian market had another flat month in August, with the ASX200 Accumulation Index posting a meagre 0.7 per cent return, which was boosted by energy shares (up six per cent).

While gains were widely shared among the sectors, retail-focused real estate investment trusts (REITs) had a tough month, the firm said.

The report noted that Australia’s tighter monetary policy settings relative to the rest of the world, along with declining commodity prices, led to lower returns, and in particular a noticeable divergence in global and domestic performance since 2013, with Australian shares the laggards.