Chant West confirms grim super tidings
Chant West has confirmed the grim news issued by other ratings houses — that October represented the worst month for superannuation returns in 21 years.
According Chant West, the median for growth funds (those with a 61 to 80 per cent allocation to growth assets and the default option for most members) returned negative 7.5 per cent in October — the worst monthly result since October 1987.
Chant West said this contributed to a fall of nearly 10 per cent for the quarter and 20 per cent for the year.
The research house said it was not just share prices that had fallen in recent months and that for Australian investors the other major factor had been the dramatic fall in the value of the Australian dollar, particularly against the US dollar.
It said super fund members might well be questioning whether this had been good or bad performance and the answer depended on their superannuation fund’s approach to currency management.
“Currency movements mainly affect the returns for international shares, since most funds fully hedge any other overseas assets,” Chant West said. “There are various strategies that funds adopt for their international share exposure, either to insulate them or to profit from currency movements in one direction or another.”
It said the most common strategy was for funds to set a strategic hedge ratio so some international shares were hedged and some were not.
AUTHOR
Mike Taylor
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