Super funds continued their recovery in May, with the median balanced option returning 2.1 per cent for the month, according to estimates from SuperRatings.
The result followed a 2.6 per cent gain in April and left balanced funds fully recovered from the 3.2 per cent loss recorded in March after the outbreak of the US-Iran conflict unsettled global markets.
The rebound was largely driven by a technology-led rally in international equities, helping lift returns across all major risk profiles.
Median growth options delivered an estimated return of 2.4 per cent in May, while capital stable options rose 1.3 per cent.
Commenting on the result, SuperRatings director Kirby Rappell said investors were becoming more accustomed to market volatility.
“As we approach the end of the financial year, we seem to be getting used to the ups and downs of markets. AI related news and IPO listings are an increasing focus, while the situation around Iran remains somewhat fluid,” Rappell said.
“This is educating members on how to deal with uncertainty, which has been more subdued in recent years. It is somewhat surreal to see that the median Balanced super fund has delivered a return of 7.9 per cent over the financial year so far and 7.4 per cent per annum over the past decade.”
Balanced options have now returned 7.9 per cent for the financial year to 31 May, while growth options have gained 9.0 per cent and capital stable options 4.9 per cent.
Over the 12 months to 31 May, the median balanced option returned 9.5 per cent, with growth options returning 10.6 per cent and capital stable options delivering 6.0 per cent.
Pension members also benefited from the market recovery, with the median balanced pension option rising an estimated 2.3 per cent in May. Growth pension options increased 2.6 per cent over the month, while capital stable pension options gained 1.5 per cent.
The median balanced pension option has now returned 8.9 per cent for the financial year to date, while growth pension options have gained 9.6 per cent and capital stable pension options 5.6 per cent.
SuperRatings said the speed of the recovery highlighted the importance of maintaining a long-term investment approach, noting members who switched into cash or other defensive assets during the March market downturn would have missed the subsequent rebound.
While uncertainty remained around developments in the Middle East and upcoming AI-related public listings, Rappell said funds were positioned to finish the financial year strongly.
“At the end of May, funds are now on track to deliver high single digit returns for the financial year, with more growth-orientated options potentially reaching double-digits if the current momentum holds through June,” Rappell continued.
“However, as March reminded us, investor sentiment and markets can shift quickly. We encourage members to remember that superannuation is a long-term investment and to speak with their fund or a trusted professional financial advisor before making any changes to their investment strategy.”
