Strong July growth fund returns boosted by energy sector
Driven by strong listed sharemarket performance, the median growth superannuation fund, holding 61–80 per cent growth assets, returned 1.5 per cent in July.
Meanwhile, the Balanced option returned some 1.2 per cent and the Conservative option returned 0.8 per cent, respectively.
According to Chant West, it signals a bright start to the financial year following a strong FY23 return of 9.2 per cent.
The research house had previously estimated median growth fund return to sit at about 8.5 per cent by the end of the financial year following a slight pullback in May where it was down some 0.4 per cent over the month.
In July, higher risk investment options benefited the most and were led by a strong month for the energy sector in listed sharemarkets, Chant West noted.
“Australian shares were up 2.9 per cent for the month. Developed market international shares rose 2.9 per cent in hedged terms and 2.1 per cent unhedged. International bonds were flat, while Australian bonds were up 0.5 per cent,” explained Mano Mohankumar, senior investment research manager.
“With share markets performing strongly, naturally it was the higher risk investment options that benefited most.”
He highlighted the US and eurozone saw falling inflation and positive economic data and both appeared to be close to the end of its interest rate hiking cycles.
Meanwhile, emerging markets held much more promise than developed ones.
“Emerging markets outperformed developed markets in July, returning 4.9 per cent as the Chinese government indicated support for its struggling property sector. It also pledged to boost consumption and alleviate local government debt issues,” Mohankumar said.
“Back at home, the Reserve Bank of Australia left interest rates on hold at 4.1 per cent earlier this month for the second consecutive month. This was in response to slowing economic growth, which is starting to bring down inflation, and also to the burgeoning cost of living pressures on Australian households.”
The research house reiterated that super is a long-term proposition, which has provided real returns of 5.2 per cent per annum since the introduction of compulsory super.
This is well above the typical target of 3.5 per cent, it added.
AUTHOR
Rhea Nath
Rhea L Nath is a journalist on Super Review and InvestorDaily, with a focus on funds management, superannuation, and institutional investment. Previously, she covered small business and entrepreneurship news at Dynamic Business and multicultural issues at Indian Link Media Group. In 2022, she was named Young Journalist of the Year at the NSW Premier’s Multicultural Communications Awards.
Recommended for you
Australia’s largest super fund, AustralianSuper, has announced multiple additions to its executive leadership team to focus on global growth and innovation.
Super Review rounds up last month’s biggest people moves in the superannuation industry, including a new fund chair and a private markets head.
Investment returns for the Future Fund hit a milestone in September, adding $200 billion in value for the first time ever.
Australia’s largest super funds have deepened private markets exposure, scaled internal investment capability, and balanced liquidity as competition and consolidation intensify.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
225.31 3 y p.a(%)
2
Loftus Peak Global Disruption Fund Hedged
120.73 3 y p.a(%)
3
Global X 21Shares Bitcoin ETF
72.47 3 y p.a(%)
4
Paradice Australian Mid Cap A
69.09 3 y p.a(%)
5
Global X Ultra Long Nasdaq 100 Complex ETF
61.94 3 y p.a(%)
