Median growth superannuation funds (61 to 80 per cent growth assets) retreated to 2.3 per cent in January and have continued to slide further into the red in February, according to Chant West.
The research house’s latest data found Australian shares and hedged international shares fell 5.4 per cent during the month but the Australian dollar depreciation meant the loss in unhedged terms was smaller at 3.2 per cent.
Listed property was mixed, with Australian REITs up 0.9 per cent, but global REITs down 3.6 per cent.
Chant West said listed shares may have been the main driver of performance but were not the only drivers.
Chant West’s director, Warren Chant, said while some super fund members panic when they see media reports about share markets falling sharply, they need to remember that growth funds, which most Australians are invested in, typically only have about 55 per cent of their assets in listed shares and REITs.
“It’s also important to put things in perspective. Growth funds have just come off four consecutive years of positive returns averaging 11 per cent per annum. Now that’s not normal. Funds have had a very good run, but members need to remember that super is lifetime investment, and there will be good times and bad times along the way,” he said.
“The typical long-term objective for growth funds is to outperform inflation by 3.5 per cent per annum and funds have been delivering on this promise for a very long time.
“We’re in a period of low growth and high volatility and this could last for some time. However, we encourage super fund members to remain patient and not panic. Moving into a more conservative investment option now would not only crystalise your losses but you may miss out on the benefits of any subsequent rebound.”
Chant West also found that industry funds had outperformed retail funds in January with a return of -2.0 per cent versus -2.6 per cent. Industry funds also outperformed in the long-term at 6.7 per annum against 5.4 per cent over the 15 years to January 2016.
