Funds navigate October turbulence with modest gains

Funds grappled with a challenging October as SuperRatings reports a modest 0.2 per cent return for the median balanced option.

Most asset classes posted negative returns in October, with only international shares and cash showing gains, SuperRatings said in a statement. 

It said that Balanced and Growth options managed to sidestep losses, thanks to international share exposure, while more defensive options slipped into the red as both fixed interest and property declined.

“We saw a significant slowdown over October as markets absorbed interest rate announcements and awaited the outcome of presidential elections in the US,” said Kirby Rappell, executive director of SuperRatings. “Funds’ strong diversification strategies served them well over the period month, with losses in some asset classes being offset by gains in others.”

The median growth option grew by an estimated 0.4 per cent in October, while the median capital stable option, with limited exposure to international shares fell by 0.3 per cent.

Pension returns followed accumulation trends, with the median balanced pension option up an estimated 0.2 per cent, while the median capital stable pension option slipped 0.4 per cent, and the median growth option rose by 0.4 per cent for the month.

Looking forward, Rappell said members should prepare for market fluctuations amid steady rates and Trump’s re-election.

“Funds have now delivered positive returns to members invested in Balanced (60–76) options, where most Australians are invested, for six consecutive months,” said Rappell. 

“However, with the Reserve Bank of Australia holding interest rates steady, and the re-election of Donald Trump as President, we can see that members should be prepared to see ongoing ups and downs in their balances. Despite the challenges, super returns have had a strong start to the financial year and continue to deliver for members over the long term.”