Super fund returns have continued their decent start to 2019, with returns up for the fourth consecutive month in April.
According to Chant West, the median growth fund gained 1.7 per cent for the month, following a March quarter return of 6.1 per cent. This put it firmly back in positive territory for the financial year to date, sitting at 5.2 per cent despite the slump suffered as a result of December’s share market fall.
It’s worth noting however, that growth funds, which Chant West categorises as those that are 61 – 80 per cent in growth assets, had averaged returns of nine per cent over the past nine financial years. It looked unlikely that this financial year’s returns, while in the black once again, would hit that height.
Chant West senior investment research manager, Mano Mohankumar, warned that the nine per cent strong run should be seen as the exception rather than the rule, though.
“While the results over the past four months have been positive, we caution members not to get carried away. In the past week we’ve seen the re-emergence of trade tensions between the US and China, prompting a retreat in global share markets so far in May,” he said.
“And while concerns about Brexit and the pace of global economic growth may have lessened, they are still lingering at the back of investors’ minds.”
Mohankumar said that April’s strong performance came on the back an increased appetite for riskier assets, following encouraging economic data and ongoing dovishness from major central banks around the world.
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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