Super funds are officially back in black despite liquidity fears and market volatility earlier in the year, according to SuperRatings.
Super funds have posted their fifth consecutive month of gains, with the median balanced option returning 1.8 per cent in August and taking the financial year-to-date return to 2.9 per cent – but members should be on the lookout for increased volatility through the latter half of calendar year 2020.
“Australia has navigated the pandemic incredibly well compared to other countries, which has helped boost confidence locally,” said SuperRatings executive director Kirby Rappell.
“Two key contributors are the relative success of Australian governments in managing the pandemic, and the stability that superannuation provides to our economy and financial system.”
More restrictive lockdowns in Victoria are expected to have a “significant impact” on long-term growth, while more ups and downs can be expected as the market outlook “evolves.”
“The theme for the second half of 2020 will hopefully be one of continued recovery, however this will likely be unevenly spread across markets and region,” said Mr Rappel.
SuperRatings believes Australia’s super funds have done “an incredible job” at accumulating wealth for retirees over a period that now includes two major financial and economic crises.
“According to SuperRatings’ data, since August 2005, a starting balance of $100,000 would now be worth $238,286 for members in a balanced option,” SuperRatings said.
“For a growth option this would be $239,917. A member with full exposure to Australian shares would have seen their balance growth to $255,883. In contrast, returns on cash would have seen the balance grow to only $157,193.”