Solid start for fund returns amid ongoing uncertainty

Following an end-of-year rally in December, super funds have made a “good start” to 2024, according to the latest estimates from SuperRatings.

Research house SuperRatings has estimated that the median balanced superannuation option delivered a return of 1.1 per cent in January.

“Funds continue to capitalise on the strong momentum in markets as they enter 2024. While returns so far are looking more modest than last year’s strong rebound, super funds remain well positioned to deliver a good result to members in the face of ongoing uncertainty,” said executive director of SuperRatings, Kirby Rappell.

“With continued ups and downs expected, we encourage members to remain focused on long-term performance.”

According to SuperRatings, financial year-to-date returns are currently estimated at 4.9 per cent, with several months remaining in the year. But the trajectory of inflation and the consequential shifts in interest rates continue to be a pivotal area of speculation.

The median growth option increased by an estimated 1.3 per cent in January, while the median capital stable option delivered a modest 0.5 per cent return to members.

Last month, SuperRatings said funds delivered strong returns for members over 2023, boosted by a share rally in the final quarter of the calendar year.

The research house estimated that the median balanced superannuation option delivered a 2.7 per cent return in December and 9.6 per cent for the full 2023 calendar year.

This result fully recovered the -4.8 per cent loss from the previous year.

SuperRatings said at the time that international shares emerged as the top performers of the year, driven by robust growth in the technology sector. Strong support for returns also came from Australian shares, while rising cash rates enhanced fixed interest and cash returns.

Looking at the individual funds, the ratings agency revealed that the highest SuperRatings Balanced Index returns over the year were 13.2 per cent for members in the Hostplus – Indexed Balanced option, closely followed by Brighter Super Optimiser Accumulation - Multi-Manager Growth Fund returning 13.1 per cent, while ESSSuper – Balanced Growth completed the top three, returning 12.8 per cent.

In its forward estimate, the ratings agency said that while it sees inflation slowing into 2024, as the impact of the interest rate rises throughout 2023 softens consumer demand, it expects to see continued ups and downs, as markets remain sensitive to local and global events.