Super returns to pick up: SuperRatings

Superannuation fund members can look forward to the second half of 2018, with SuperRatings predicting an improvement in fund returns after a volatile start to the year but warning that Australian shares will still underperform their global counterparts.

Super funds historically recorded higher returns in the second half of the year, with SuperRatings finding that balanced options delivered an average return of 1.9 per cent in the September quarter and 1.7 per cent in the December quarter over the last decade compared to a 0.9 per cent average for the June quarter.

This June, however, funds saw better growth than expected as the median balanced option grew approximately 1.3 per cent over the month.

“Luckily this year investors forgot the old adage of ‘sell in May and go away’,” SuperRatings chief executive, Kirby Rappell, said. “Instead we saw a strong recovery which ended up producing a very positive June quarter for superannuation.”

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“If history is a guide, members can anticipate a bit of a kick in coming periods, although this is conditional on the management of some downside risks to the Australian economy, as well as the broader global growth picture.”

Rappell warned that while Australian shares are set to move higher throughout the rest of the year, they would most likely continue to underperform global markets.

“With the Australian share market dominated by the banks, it is sensible to expect softer growth in the wake of the Royal Commission into Financial Services. The Australian economy has a bit of extra baggage, including low wage growth and a cooling property sector which could impact sentiment, but overall our outlook is positive,” he said.

SuperRatings found that in the ten years to fiscal 2018’s end, the median balance returned 6.5 per cent annualised, with median Australian share options delivering the highest returns as they more than doubled in size over that period.