Superannuation returns experienced a minor correction in October, but remained on an upward trajectory in year-to-date terms, according to the latest data released by Chant West.
Chant West principal Warren Chant pointed to the early data for November as an indicator of a resumption in growth, but SuperRatings managing director, Jeff Bresnahan questioned whether October was a hiccup or a sign of worse to come.
The Chant West data showed that after seven straight months of gains, returns for the median growth fund were down 1.2 per cent in October, but were still up by 8.9 per cent in financial year to date terms.
Commenting on the data, Chant said despite the slight drop in October, the median fund has risen by 17.4 per cent since the end of February when the rally in share markets began.
“Going into November, markets have picked up momentum again, so at this stage it looks as though October was just a brief ‘time out’,” he said.
Chant said master trusts were continuing to outperform industry funds in the recovery because of their higher exposure to listed assets, and in the eight months to the end of October, the median master trust rose by 22.2 per cent against 14.3 per cent for the median industry fund.
He said if superannuation investors learned only one lesson from the past two years, it should be that heroes could quickly turn into zeroes and that it was unwise to rush into decisions based on short-term results.
“Different phases of the market cycle suit different investment approaches, and what works well in one phase may not do so well as the cycle moves on,” Chant said.
Bresnahan’s SuperRatings data revealed that the median balanced fund had declined 1.05 per cent in October, but was up 5.85 per cent for 12 months to the end of October.
SuperRatings concurred with the Chant West analysis that the main driver for super funds had been equities, and noted that “not surprisingly, funds with higher than average unlisted assets have suffered after significant valuation write-downs”.
