Australian super fund members should steady themselves for a period of low returns, and the possibility that funds will not meet their investment objectives, says Chant West.
According to Chant West, the sources of future growth are become increasingly difficult to identify and investors should therefore prepare for a period of poor returns.
Chant West director Warren Chant said: “[Asset managers] report that many asset sectors are now close to fully valued and it’s becoming harder to identify sources of future growth.
“So members should expect returns to be much lower, in the medium term at least, than what they’ve seen over the past three years.
“In fact, some investment experts are questioning funds’ ability to meet their investment objectives over the next decade, not just for growth options but also for other risk categories,” he said.
Mr West noted that although many funds have experienced three years of double-digit financial year returns, the current outlook “isn’t quite so rosy”.
The median growth fund performed reasonably in July, gaining 2.3 per cent. Australian shares were up 4.3 per cent and international shares increased 2.4 per cent in hedged terms for the month.
For the year ending 30 June, median growth funds recorded a return of 9.8 per cent.
However, “so far in August we’ve seen share markets retreat, and as a result the median growth fund has already lost much of July’s gains,” Mr Chant said.
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