Super funds down in October

Superannuation funds retreated in October in the lead-up to the US election but there is a good chance funds will deliver a fifth consecutive calendar year return, according to Chant West.

In the research house's latest super fund performance report, the median growth fund (61 to 80 per cent) was down 0.7 per cent for the month, bringing the return for the first 10 months of 2016 to 4.1 per cent.

While listed share markets were the main drivers of growth fund returns, they were down in October as Australian shares fell 2.2 per cent, international shares fell 0.6 per cent and 1.4 per cent in hedged and unhedged terms respectively.

Listed property suffered on rising bond yields, with Australian real estate investment trusts (REITs) plummeting 7.7 per cent and global REITs retreating 4.5 per cent.

VIEW ALL

View all

Chant West director, Warren Chant, said the nervous mood that continued in October were the concerns on the outcome of the US election, the future of global interest rates, and the consequences of Brexit that still preyed on investors' minds.

"So far, stock markets around the world have, for the most part, taken Trump victory in their stride. Defying predictions of a major slump, shares fell as a result became clear but then reversed direction and rose strongly," Chant said.

"However, bond markets have taken a hit, based on expectations that the Trump administration will follow through on its promises to spend significant amounts on infrastructure, and we already seen significant falls in the value of REITs and listed infrastructure."

Chant said markets in the Eurozone were helped by better than expected quarterly results from several banks.

"Closer to home, Trump's victory leaves Australia and China quite vulnerable given their reliance on international trade. Trump has canvassed protectionist policies that, if enacted, have the potential to set off a trade war that could be damaging to both economies," he said.

The report also found industry and retail funds both returned -0.8 per cent in October but industry funds continued to hold the advantage over the longer term with a 5.6 per cent per annum return against 4.8 per cent for retail funds over the 10 years to October 2016.