Chant West has estimated that the median growth superannuation fund is up 8.8 per cent so far this year, boosted by a 3.1 per cent return during November.
The research house said share markets have been the main driver of the year-to-date super fund returns, especially international shares, which have gained 22 per cent in 2023.
“While Australian shares haven’t reached the same heights this year, they’ve still delivered a solid 9.5 per cent over the same period,” commented Chant West senior investment research manager Mano Mohankumar.
“At a time when many Australians are feeling financial stress due to high inflation and high interest rates, the better-than-expected calendar year return will provide some good news.
“It’s a reward for super fund members who have remained patient and maintained a long-term focus. A final result close to the 8.8 per cent estimate would more than offset the entire 2022 calendar year loss of 4.6 per cent.”
Mr Mohankumar noted that the strong performance from share and bond markets observed in November came on the back of easing inflation in the US and other regions, which he said further raised hopes that interest rates may have peaked.
Australian shares rose by 5.1 per cent during the month while international shares gained 8.4 per cent in hedged terms. But the sharp appreciation of the Australian dollar during November scaled back the return for international shares to 4.4 per cent in unhedged terms.
Chant West pointed out that Australian and international bonds also performed strongly in November, returning 3 per cent and 3.2 per cent, respectively.
“Despite this positive news, market volatility is unlikely to disappear given the uncertain backdrop, with signs of slowing economic growth in the US, stubborn services inflation and geopolitical risks,” Mr Mohankumar warned.
“However, super fund members should take comfort in the fact that most Australians are invested in well-diversified portfolios that have their investment exposure spread across a wide range of asset classes. That diversification helps provide smoother returns during periods of market volatility.”
Since the introduction of compulsory super in 1992, Chant West said the median growth fund has returned 7.8 per cent per annum (p.a.).
Taking into account the annual consumer price index (CPI) increase of 2.7 per cent over the period, Chant West reported that the median growth fund has delivered a real return of 5.1 per cent p.a., which the firm said is “well above” the typical 3.5 per cent target.
