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Market sell-off dents super returns
Superannuation fund balances are likely to be dented by the market sell-off which has been occurring in October, according to specialist superannuation ratings house, SuperRatings.
The ratings house has issued preliminary estimates based on the period between 28 Spetember and 11 October suggesting the typical balanced option account with a $100,000 balance will be down by the order of $2,8000.
It said that for those with a pure Australian share exposure this could be as high as $4,800.
Commenting on the analysis, SuperRatings executive director, Kirby Rappell said the market pullback was another timely reminder to members that good times should not be taken for granted.
“We do not believe that recent selling will translate into a bear market for shares, but it certainly presents a clear message to super funds and other investment managers to be wary of holding too much risk,” he said.
“These sort of market moves will inevitably impact superannuation account balances in the short term. However, over longer periods, as well as over the past 12 months, super returns are holding up well. The challenge for super funds in this environment will be to maintain discipline and stick to their long-term investment strategy,” Rappell said.
However, he said that, when considered over the longer term, the recent selling would not significantly diminish the stellar performance achieved by super funds over recent years.
“An investment of $100,000 in the median balanced fund 10 years ago would now be worth around $193,751 as at the end of September 2018. In the best performing balanced fund over that period, the same $100,000 investment would have doubled in value to $213,156.”
The SuperRatings analysis said a comparison of balanced option returns showed that CareSuper remained ahead of the pack with an annual return of 7.6 per cent over the past decade, followed closely by Equip MyFuture and HOSTPLUS.
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SuperRatings has shared the top 10 balanced options of the last financial year.
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Australian superannuation funds have again generated strong returns for FY25, with the median growth fund returning 10.5 per cent for the year, according to Chant West.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom 465 Calder Road Calder
99.46 3 y p.a(%)
2
DomaCom DFS Mortgage
95.46 3 y p.a(%)
3
Global X 21Shares Bitcoin ETF
78.55 3 y p.a(%)
4
BetaShares Crypto Innovators ETF
50.39 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
47.50 3 y p.a(%)
Cursory look at Host Plus "Balanced" option and it appears to be 90% growth assets. Host Plus appear to classify property and infrastructure as "defensive" assets and add them in with cash and fixed interest. Perhaps SuperRatings could review what a "Balanced" option is, and whether property and infrastructure are "growth" or "defensive". Hopefully the members understand what they are invested in. Caveat Emptor.