Super returns defy volatility

Superannuation fund returns edged back into positive territory in February despite share market volatility, according to the latest data from specialist research house, Chant West.

The Chant West analysis noted that after experiencing sharp losses in early February on the back of sliding share markets, the median growth superannuation fund (61 to 80 per cent in growth assets) recovered to finish the month barely in the red, down just 0.2 per cent.

It said that despite the challenging start to February, financial year to date returns remained at a healthy 6.5 per cent.

Looking at the February volatility, the Chant West analysis said share markets around the world had retreated with hedged international shares losing 3.6 per cent, but a lower Australian dollar (down from US$0.81 to US$0.78) limited the fall to 0.4 per cent in unhedged terms.

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Commenting on the result, Chant West senior investment research manager, Mano Mohankumar pointed out that share markets were not the sole drivers of superannuation fund performance.

“Members sometimes panic when they hear about share markets falling sharply, but they need to remember that the typical growth fund only has about 55 per cent of its assets in listed shares and property,” he said.

“These funds invest in a wide range of other assets as well, including alternative and unlisted assets, so when share markets stumble this diversification enables them to cushion the blow – as happened in February.”