Super returns on track to see strong calendar year finish

The strong rally of sharemarkets, both globally and in Australia, has continued to drive strong returns for super, according to Chant West.

The median growth fund (61–80 per cent in growth assets) rose 1.2 per cent over the month of September, driving the calendar year return to an “impressive” 8.6 per cent to date.

Meanwhile, the all-growth (96–100 per cent in growth assets) and high growth (81–95 per cent in growth assets) delivered 1.7 per cent and 1.3 per cent, respectively.

“Given the strength of sharemarkets this year, higher risk categories have fared even better so far,” said Chant West senior investment research manager Mano Mohankumar.

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Other risk categories, namely the balanced (41–60 per cent in growth assets) and conservative (21–40 per cent in growth assets) also rose, albeit more modestly, at 1 per cent and 0.7 per cent, respectively.

Mohankumar said that sharemarkets proved to be primary drivers of growth fund performance, with the median growth option seeing 25 per cent allocated to Australian shares and 30 per cent to international shares.

“In September, sharemarkets globally benefited from the US Federal Reserve officially cutting interest rates for the first time since March 2020, with more to come. While a reduction was largely already priced into markets, the 50-basis point cut was larger than usual,” Mohankumar said.

“Markets were also boosted by China announcing a raft of stimulus measures to lift economic growth and support its struggling property market.”

In September, Australian shares returned an impressive 3.1 per cent while developed international shares were up 1.5 per cent in hedged terms.

“The appreciation of the Australian dollar (up from US$0.68 to US$0.69) turned that into a small loss of 0.5 per cent in unhedged terms,” he said.

The average super fund holds approximately 70 per cent of its international shares exposure unhedged.

Meanwhile, emerging markets shares also outperformed developed markets, led by China, delivering a return of 4.3 per cent.

Mohankumar highlighted bond markets were also on the rise in September, with Australian and international bonds returning 0.3 per cent and 1.1 per cent, respectively, as bond yields fell.