More volatility hits super

Industry funds dominate

By Christine St Anne
Thu 27 May 2010

Super funds continue to be hit with market volatility as active investors face significant losses.

The volatile world markets continue to hit local superannuation funds as they face a 3 to 5 per cent swing in performance returns, according to the latest SuperRatings report.

"May is yet again another example of the ongoing volatility in a typical balanced option," SuperRatings managing director Jeff Bresnahan said. 

"May has the potential to pull the year-to-date result below 10 per cent, with the month-to-date loss estimated to be 4 per cent."

Superannuation funds, however, still managed to post 5.2 and 7 per cent growth per annum over a five and seven-year period respectively, according to the report.

"All of this lends itself to the old adage 'don't worry about short-term results' and look at the five to seven-year performance only," Bresnahan said.

The returns for the typical balanced option ranged from 18 per cent in the top quartile to 13.2 per cent in the bottom quartile.

Bresnahan warned, however, that people could face significant losses from switching funds or investment options.

A 6 per cent monthly swing could mean a difference of $18,000 on a $300,000 account balance because of time delay, he said.

"The statutory maximum period for switching between funds is 30 days and in many cases switching between options within funds can also be 30 days," according to Bresnahan.

"Some funds will switch investments in 24 hours, while others will take 30 days. The difference could be significant."

Industry funds continue to remain in the top 10 performing category for balanced investment options.

The top 10 superannuation funds in the SuperRatings table include OSF Super, BUSS(Q), NGS Super, Catholic Super, Telstra Super, Club Plus, AustralianSuper, Cbus, Local Super and Care Super.

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