Super fund members can expect a fourth consecutive year for financial returns, following a 2.6 per cent increase in the median growth fund (61-80 per cent allocation to growth assets) in January, according to Chant West.
Total gain over the seven months since 1 July 2012 now stands at 10.9 per cent.
Share markets, the main drivers of growth fund performance, experienced a strong month in January. Australian shares surged 5.0 per cent while international shares advanced 5.4 per cent in hedged terms and 4.6 per cent on an unhedged basis.
Listed property also performed strongly, with Australian REITs up 4.4 per cent and global REITs gaining 3.7 per cent.
“In recent weeks we’ve seen US shares back at levels not seen since October 2007. While memories of the global financial crisis (GFC) haven’t quite faded away, investors are finally feeling confident enough to forsake the safety of cash and bonds and venture back into equities,” Chant West director Warren Chant said.
“The same thing is happening in Australia and our share market has run up strongly, although we’re still nearly 10 per cent off our all-time highs,” he said.
The strong gains seen in January have continued into February, accompanied by a number of positive factors.
Mr Chant explained that the postponed or negotiated US fiscal cliff issue, improved company profits in Australia and the United States, slowdown in China and steps to devalue the Yen in Japan have all contributed to the growth.
“All of this is occurring against the background of low interest rates across the world, and clearly investors are prepared to take on a little more risk and are shifting funds out of cash and bonds and into shares,” he said.
“Whether this is the start of a cyclical bull market remains to be seen, but if the GFC ‘flight to safety’ continues to unwind, there will be a lot of money flowing into growth assets.”
