The median growth superannuation option provided no return to members in July, largely as a result of flat domestic equity markets and an appreciating Australian dollar, says Chant West.
Super funds got off to a lacklustre start to the 2017-18 financial year, with the median growth option (61-80 per cent growth assets) providing a zero return for the month of July, Chant West said.
The super fund researcher said listed shares provided “mixed results” over the month, with Australian shares flat and international shares up 1.5 per cent on a hedged basis.
However, the appreciation of the Australian dollar (up 77 US cents to 80 cents over the month) meant that international shares lost 1.7 per cent on hedged terms.
Chant West director Warren Chant said: “The flat return in July comes as no surprise. While the economic outlook is looking much better than it did this time last year, investment markets have had a surprisingly good run and were set for a pause.”
“We said a year ago that many asset sectors were close to being fully valued, and after a further run-up in prices it’s even harder now to identify undervalued assets that will deliver solid real returns,” Mr Chant said.
“That’s going to be a serious challenge for super funds. They won’t be helped by the pressure they’re under to reduce investment fees, which we hope won’t inhibit their appetite for seeking out new sources of active returns,” he said.
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