Super funds managed to generate positive returns in the first quarter of 2023 with diversification helping to capture upside benefits and manage market volatility.
Monthly data from the research house estimated the median balanced option generated a return of 0.9 per cent for March and 3.4 per cent for the first three months of the year despite a slight fall in February.
The median growth option also rose by some 0.9 per cent over March and the median capital stable option rose by an estimated 1 per cent.
Returns in the previous month had been negative with the median balanced, growth and capital stable options all losing 0.4 per cent amid market uncertainty.
“Super funds continue to demonstrate their ability to capture upside benefits for members when they are available in the market while managing for market volatility through diversification,” said Kirby Rappell, executive director at SuperRatings.
“As we edge closer to the end of the financial year the outlook feels slightly more stable, although there is still a chance that annual returns could drop back into negative territory depending on the final quarter of the financial year”.
The March results followed 10 consecutive interest rate rises, which came to a halt in April to keep the official cash rate at 3.6 per cent.
With the median balanced pension option rising an estimated 1.1 per cent, SuperRatings noted pension accounts provided slightly better returns over the period.
The median capital stable pension option was also estimated to have gained 1.2 per cent over the month.
Meanwhile, the median growth pension option was estimated to rise by a slightly smaller 0.9 per cent.
With these figures, Rappell highlighted that super fund performances should be gauged on a more long-term horizon.
“While there has been significant ups and downs over each month in the year so far, superannuation remains a long-term investment for most and these shifts have a much smaller impact when considering 10-year performance,” he said.
“Funds are well equipped to navigate changing markets, with 10-year performance estimated to be 7.4 per cent and demonstrating resilience to date”.
