Super funds off to a rough start

Superannuation funds had their fourth negative month for the financial year so far in January, according to latest SuperRatings data.

The median balanced option was down 2.1 per cent in January and took the financial-year-to-date return into negative territory to -0.8 per cent.

SuperRatings said the financial year-to-date results sit well below the financial year-to-date returns of 6.9 per cent seen in January last year, and 8.2 per cent in January 2014.

"With further volatility also experienced in February, concerns exist as to whether markets will bounce back sufficiently to achieve a positive result by the end of the financial year," the report said.

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SuperRatings founder, Jeff Bresnahan, said unstable markets were making the 2015/16 financial year a challenging one for super funds.

"Australians have enjoyed solid growth on their super balances in recent years with the median balanced option returning 7.5 per cent per annum over the last five years," Bresnahan said.

"With concerns around global economic growth remaining and market volatility persisting, super funds are likely to face lower return environments in the near future.

"In-light of these expectations for subdued global economic growth and lower returns across major growth asset classes, the ability of super funds to manage volatility will be vital in protecting their members' retirement savings."

The report said while the MSCI World Ex-Australia Net TR Index was down 5.9 per cent for the month, the falling Australian dollar helped cushion some of the losses. However, returns on international shares were negative with the median international shares option down 3.8 per cent for the month.

"Negative market conditions also saw losses across more conservative option types, with the median capital stable option, which has been 20 per cent and 40 per cent invested in growth assets, down 0.5 per cent for the month," Bresnahan said.

However, Australian listed property performed well, up 1.0 per cent for the month, while the median cash and diversified fixed interest options were up 0.2 per cent and 0.5 per cent respectively.