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Super fund returns dip amid ongoing market uncertainty

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4 minute read

After starting the financial year on a positive note, negative returns were seen in August.

The median balanced superannuation option had an estimated return of -0.1 per cent during August, according to the latest data published by research house SuperRatings.

This followed the 1.5 per cent return seen for the median balanced option in July, in what was a positive start to the new financial year, as well as the 1.2 per cent return recorded in June.

In August, SuperRatings said the median growth option returned -0.3 per cent, while the median capital stable option returned 0.1 per cent due to its lower exposure to shares.

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“We’ve seen a more subdued return for super funds over August, however, the strong returns in July mean performance remains positive overall for the new financial year,” said SuperRatings executive director Kirby Rappell.

“We encourage members to focus on the longer term and be prepared to see more ups and downs over the coming months.”

Over the past 12 months, the median balanced option is up 7.7 per cent, the median growth option has gained 9.3 per cent, and the median capital stable option has risen by 4.2 per cent.

The average annual return of the median balanced option is 7.1 per cent over three years, 5.7 per cent over five years, 6.6 per cent over seven years, and 7.2 per cent over 10 years.

Meanwhile, the median growth option has had an average annual return of 8.5 per cent over three years, 6.6 per cent over five years, 8.1 per cent over seven years, and 8.4 per cent over 10 years.

Finally, the average annual return of the median capital stable option is 3.0 per cent over three years, 3.1 per cent over five years, 3.6 per cent over seven years, and 4.5 per cent over 10 years.

“Market uncertainty persists, and we continue to expect monthly fund returns to bounce around,” Mr Rappell said.

“However, over the long term, we know funds have a strong record of performing above objectives. The key message for most members is ensuring their settings are right for the long term in order to provide dignity in retirement.”

SuperRatings also touched on the results of the 2023 superannuation performance test recently published by the Australian Prudential Regulation Authority (APRA).

The research house noted that the test has had a “significant impact on MySuper default products during the past three years”. Notably, the only MySuper product to fail this year’s test – AMG Super – was already closed to new members.

“The test was also expanded to a broader range of products this year and members who are invested in a failing product will soon be receiving a letter from their fund,” SuperRatings added.

“If you do receive that letter, make sure you review your investment option or speak with a trusted adviser to understand why it failed and if it’s still suitable for you.”

Firms impacted by the latest performance test, including Insignia, ART, and AMG Super, have indicated that they have begun taking action.

Super fund returns dip amid ongoing market uncertainty

After starting the financial year on a positive note, negative returns were seen in August.

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Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.

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