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Super funds deliver slightly negative returns in May

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SuperRatings has published its estimates for May’s super fund returns.

The median balanced superannuation option delivered a -0.2 per cent return during May, according to the latest estimates from research house SuperRatings.

Stubbornly high inflation and a return to tightening monetary policy by the Reserve Bank of Australia have led to persistent uncertainty in markets over the past year, the research house said.

As a result, superannuation fund returns are expected to be slightly negative over the month, with SuperRatings estimating the median growth option delivered a -0.3 per cent return for the month, while the median capital stable option delivered a -0.2 per cent return for the period.

“Despite the uncertain outlook for inflation, we estimate financial year to date returns on a balanced (60-76) option to be 7.9 per cent as at the end of May,” the research house said.

“Depending on returns throughout June, super funds are on track to manage a return above inflation for the past 12 months,” it added.

Moreover, SuperRatings estimated that the median balanced option returned 4.0 per cent over the past 12 months, with an average annual return of 7.4 per cent over three years, 5.9 per cent over five years, 6.6 per cent over seven years, and 7.3 per cent over 10 years.

The median growth fund was estimated to have risen 5.0 per cent during the past year, with an average annual return of 9.1 per cent over three years, 6.8 per cent over five years, 7.7 per cent over seven years, and 8.5 per cent over 10 years.

The research house also estimated that the median capital stable option was up 2.6 per cent over 12 months and had delivered an average annual return of 3.2 per cent over three years, 3.2 per cent over five years, 3.7 per cent over seven years, and 4.5 per cent over 10 years.

Executive director of SuperRatings Kirby Rappell commented, “While May saw a small fall, funds are currently on track to deliver a return in excess of inflation, so funds have kept the value of members’ money from diminishing in a high inflation environment, which has been no simple task.”

Mr Rappell added that he expects inflation, and the central bank response to inflation, to remain the most influential factors for superannuation performance into FY24.

“Super fund returns have had a bumpy year with markets facing several shocks over the last 11 months, however, funds continue to navigate the challenges well with most accounts seeing growth over the course of the full year.”