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Super funds face tough year end
Superannuation funds might end the year in negative territory for the first time since 2011 because of the recent market volatility, financial advisory firm Dixon Advisory said.
According to Dixon’s head of advice, Nerida Cole, super fund members should prepare themselves for more volatility which would be driven by the ongoing US-China trade dispute, Italian budget crisis, rising interest rates in the US, slowing in the Chinese economy and a slowing Australian property market. And on top of that would come the complexity of Brexit, she said.
“The big detractors this year were Asian and European share markets – and people with more of their money in these regions would be facing bigger drops,” Cole noted.
“If we see markets continue to fall over the next two weeks – super funds could end up in negative territory.”
Looking ahead, Cole reminded investors they should take a more cautious approach towards investments and check how their super was invested, including spread between shares and cash and whether this mix was right for them.
Investors should also pay a closer attention and review their long-term returns, taking into account the Productivity Commission’s indications that the average valanced funds would return around six per cent per year over the last 10 years.
“In short, there is no need to settle for a fund that’s not working for you and certainly no need to settle for an underperforming fund,” she said.
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The research house has offered a silver lining after super fund returns saw the end of a five-month streak last month.
A survey of almost 6,000 fund members has identified weakening retirement confidence, particularly among those under 55 years of age, signalling an opportunity for super funds to better engage with members on their retirement journey.
The funds have confirmed the signing of a successor fund transfer deed, moving closer to creating a new $29 billion entity.
A number of measures, including super on Paid Parental Leave, funding to recover unpaid super, and frameworks to encourage investment in the energy transition, have been welcomed by the superannuation industry.
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