Retail super funds outperformed their industry peers over a strong July, but investors should still be concerned about current economic conditions, says Chant West.
A sustained share market rally following the post-Brexit sell-off contributed to the strong super fund returns, Chant West said, with Australian shares climbing 6.4 per cent and real estate investment trusts both locally and abroad seeing increases of more than 5 per cent.
Despite a strong start to the financial year, Chant West director Warren Chant cautioned that investors need to remember the current climate of low growth and increased volatility is expected to continue and funds face "a challenging period” going forward.
“Investment markets have had a good run in recent years, but most assets are now fully valued or close to it, so it’s hard to find reliable sources of real return. That difficulty has only been compounded by the current political uncertainty,” Mr Chant said.
Mr Chant cited the recent RBA cash rate cut and ongoing concern about the Chinese economy’s growth rate as key drivers of concern in the Asia-Pacific region, adding that “mixed” economic data from the US and political uncertainty in the UK are also contributing on a global level.
Given these headwinds, Mr Chant said it would be important for super fund members to “prepare for returns that are quite a bit lower than they’ve been used to” in the coming years.
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