Australian superannuation funds have posted their worst three-month returns since the December 2008 quarter, however, one association chief believes it is not time to panic
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The latest performance findings from superannuation research firm Chant West revealed a minus 5.1 per cent return for the September quarter in growth funds.
Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos said fund members knew the market was in a state of flux and therefore they needed to look at the underlying strength of their fund, just as they did during the global financial crisis (GFC).
“Think of a house, even though your house prices go up and down, if you’ve got a good house that’s structurally sound, then your money is safe,” Vamos said.
“Basically the Australian economy – where the majority of superannuation assets are – is very, very strong and its growth is predicted to be very, very strong.
“So even though you’ve got an immediate reflection in share prices, the underlying companies are still very strong.”
She said that while the market was volatile and the financial problems of Europe and the United States would not be resolved soon, poor performance needed to be assessed in context.
“Do we have a significant change in the Australian economy? No. Do we have high unemployment? No. Do we still have a balance of trade and an export of our commodities? Yes,” she said.
She said superannuation funds were responding to the increased uncertainty by continuing to educate and communicate with their members.
Australians closer to retirement needed to review their short-term needs and perhaps choose a more conservative portfolio, she said. They should then address medium- and long-term needs and invest accordingly.
Chant West director Warren Chant said investors would be disappointed with the 5.1 per cent loss for the quarter coming off the back of a 9 per cent return to June 2011.
“They’ve given up more than half of that gain of return last year,” Chant said.
He said during the similar volatility experienced in the GFC, superannuation members were not switching from one fund to another but instead assessed their portfolio risk.
“A lot of people are reducing their exposure to shares following the GFC,” he said.
“Prior to the GFC, [they] didn’t think their super would ever go down; they didn’t connect that if share markets fell, their super would fall. So super funds can always do much better at communicating to members the nature of investments.”
