Superannuation funds experienced a disappointing year of performance in 2008 as a result of continued weakness in share markets during the December quarter, according to Chant West data.
The latest superannuation performance survey found that the median for growth funds, which is the default option for most members, returned -11 per cent for the December 2008 quarter and -22.3 per cent for the year.
The gap between the best and worse performing growth funds blew out to nearly 15 per cent as a result of funds’ different exposures to listed markets, Chant West principal Warren Chant said.
“Never has asset allocation been more important,” he said.
“As expected, considering the downturn in financial markets worldwide, the returns were progressively worse the higher the allocation to growth assets.”
The performance gap between industry superannuation funds and master trusts also experienced a substantial blow-out during 2008, the data showed.
“Over the year the difference was about 6 per cent, which is considerably higher than the historical average of about 1.5 per cent to 2 per cent per annum,” Chant said.
“The main reason for this blow-out in performance gap is that industry funds generally have higher weightings to unlisted assets, about 25 per cent versus 7 per cent for master trusts, and unlisted asset returns have been far stronger, or less weak, than those of listed assets.”
However, Chant West said there is considerable scope for the downward revaluation of unlisted assets over the next six months.
“As this occurs, we expect to see the performance gap narrow considerably,” Chant said.
