Super funds provided a modest return of 0.5 per cent in May as the world dealt with fluctuating trade tensions between China and the US, according to Lonsec.
Citing figures from SuperRatings, a statement from Lonsec said that markets were “frustrated” by the “‘on-again, off-again trade war” between the two world powers and super funds “struggled” throughout May.
SuperRatings chief executive Kirby Rappell commented: “May was a challenging month for super, with global factors playing a significant role.
“The ongoing tariff saga between the US and China, along with talks between President Trump and North Korean leader Kim Jong-Un seemed to wrongfoot markets in May, and super funds were not immune from the uncertainty,” Mr Rappell said.
On 20 May, AMP Capital chief economist Shane Oliver noted that China and the US seemed to be moving towards a “negotiated solution”, even if it was “going to be a slow process”.
The following day, the two nations came to a last-minute agreement following “constructive” progress in trade talks, and US Treasury Secretary Steven Mnuchin appeared on Fox News Sunday saying the US was “putting the trade war on hold”.
But on 31 May, US President Trump reversed his decision, announcing tariffs on $50 billion worth of imported goods from China.
However, Mr Rappell also indicated that it wasn’t all doom and gloom, with Australian super funds remaining on track for double-digit returns at the end of the financial year.
“Despite May’s disappointing performance, super members should expect a very solid innings from super come 30 June.
“We need to see an average return of around 1.5 per cent in June for balanced funds to record a double-digit gain for the financial year, which is entirely possible.”
Investors fully exposed to Australian shares fared better with a 1.1 per cent return, while those with a largely global shares exposure had an average return of only 0.4 per cent.