Super returns take a hit following August sharemarket wobble: SuperRatings

The median balanced option gained 1.9 per cent over July, continuing the strong momentum built up by markets at the tail end of financial year 2023–24, according to SuperRatings.

The median growth option increased by an estimated 2.4 per cent while the median capital stable option rose by a more modest 1.3 per cent.

Pension returns were also positive, with the median balanced pension option increasing by an estimated 2.2 per cent.

Meanwhile, the median capital stable pension option and the median growth pension option gained 1.5 per cent and 2.5 per cent, respectively.

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Despite this strong start, SuperRatings executive director Kirby Rappell said a major market sell-off at the start of August has now largely “given back” these results.

Spurred by macro and systematic trades amid concerns of a US recession, alongside a surprise decision by the Bank of Japan to lift interest rates and an unwinding of yen carry trades, global markets saw significant declines earlier this month.

The ASX plummeted 3.7 per cent on 5 August as the panic set in and the loss was even more pronounced (-6 per cent) when considering the start of the month when Australian shares posted a record high, surpassing 8,100 points.

The S&P 500, Dow Jones, and Nasdaq also tumbled in volatile trading with losses of more than 2.5 per cent each, though these have since recovered.

“We saw returns retaining their momentum from last financial year in July, setting up a good start to FY25. However, markets have since seen a strong sell off leading to an estimated -1.7 per cent return for balanced options over the first two weeks of August, which has largely given back the July result,” said Rappell.

He said funds are “now practically back to where they were at the start of the financial year”.

“We expect to see continued ups and downs for fund returns over the coming months as central banks respond to changes in conditions and significant geopolitical events play out,” Rappell said.

Still, the executive reiterated the long-term horizon of super returns, encouraging members “to focus on blocking out short term noise in favour of longer term outcomes”.