January market rally pushes super fund returns higher

The median balanced superannuation option delivered a return of 3 per cent in January, according to new estimates released by research house SuperRatings, on the back of a rally in markets both local and abroad.

This positive result for super fund members pushed the estimated return for the current financial year up to 6 per cent with five months left to go, which SuperRatings said demonstrated the resilience of super during the ongoing market volatility.

X

Continue to Website

However, the research house has warned that the upward trajectory for interest rates continues to pose a challenge to the return outlook, with increasing rates said to be either signalling economic resilience or the expansion of the inflationary threat.

In January, SuperRatings estimated that the median growth option increased by 3.4 per cent, while the median capital stable option generated a return of 1.8 per cent.

“Funds have had a positive start to 2023, and it again underlines the way in which funds have navigated an uncertain market well overall,” said SuperRatings executive director Kirby Rappell.

“However, inflation remains high, and the Reserve Bank’s commitment to controlling inflation means member balances are likely to see more ups and downs over the coming months.”

Over the past year, returns for the median balanced option were reported to have remained flat. Positive average annual returns were recorded over the past three years (4.3 per cent), five years (5.8 per cent), seven years (7.1 per cent), and 10 years (7.6 per cent).

Meanwhile, the median growth option is up 0.6 per cent over the year, delivering average annual returns of 5.1 per cent over three years, 6.7 per cent over five years, 8.2 per cent over seven years, and 8.8 per cent over 10 years.

Finally, the median capital stable option has returned negative 0.4 per cent in the past 12 months, with positive average annual returns of 1.8 per cent over three years, 3.2 per cent over five years, 4 per cent over seven years, and 4.6 per cent over 10 years.

SuperRatings previously noted that the median balanced growth option returned negative 4.8 per cent in 2022, the fourth calendar year since 2000 in which member balances were down.

The research house also found that the Perpetual Balanced Growth Fund provided a higher return than any other balanced option during the 2022 calendar year at 1.7 per cent.