Fund returns head for calendar year double digits

Superannuation fund returns look likely to end the calendar year strongly in the black thanks to strong performance in October, according to the latest data from Chant West.

At the same, the nature of the market saw retail funds outperform industry funds over the period.

According to Chant West, a surge in October left super funds in sight of a double digit return for the 2017 calendar year.

It said that following a steady September quarter, strong share markets drove returns higher in October with the median growth fund (61 to 80 per cent growth assets) gaining 2.3 per cent for the month.  This brought the return over the first ten months of the year to a very healthy 8.6 per cent/

The analysis said that in October, Australian shares surged four per cent, while international shares gained 2.5 per cent on a hedged basis but an even better 4.3 per cent in unhedged terms as a result of the depreciation of the Australian dollar (down from US$0.78 to US$0.77).  Listed property was also up, with Australian and global REITs advancing 2.2 per cent and 0.2 per cent, respectively.

Commenting on the findings, Chant West director, Warren Chant said that with less than six weeks of 2017 remaining, it was almost certain that growth super funds would finish in the black for the sixth consecutive year.

“With the year to date return sitting at 8.6 per cent, a double digit return for the year is a distinct possibility,” he said. “That would be the best result since 2013, when growth funds delivered a staggering 17.2 per cent.”

On the industry funds versus retail funds return front, the Chant West data revealed that retail funds led the way in October, posting a return of 2.6 per cent against 2.2 per cent, while noting that industry funds continue to hold the advantage over the medium and longer term.