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Super funds deliver ‘pleasing’ gains in 2023

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Returns for median balanced funds were positive in 2023, despite “swirling uncertainty and inflation”.

SuperRatings reported on Wednesday that the median balanced option is expected to return 9.6 per cent for 2023.

According to the research house, a balanced option has 60–76 per cent of assets invested in growth assets over the long term, across areas like Australian shares, international shares, property, alternatives, fixed interest, and cash.

This is a really pleasing result to observe for 2023, said executive director of SuperRatings, Kirby Rappell.

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Returns remained strong into Christmas, with SuperRatings estimating that the median balanced option generated a return of 2.8 per cent over the month.

This is a strong result on a number of fronts. Firstly, while 9.6 per cent is a strong result, it is only the 10th highest return since 2000, showing the ability of superannuation to deliver for everyday Australians at consistently high levels. Secondly, long-term returns remain strong with an estimated median return of 6.5 per cent per annum since 2000. Thirdly, this year’s return has outpaced inflation and withstood market volatility, which has been front and centre all year. Fourthly, this return is a strong return to form after the 4.8 per cent loss in calendar year 2022, explained Mr Rappell.

He, however, highlighted that while the result was “pleasing”, it was far from a smooth ride, with returns swinging from positive to negative throughout the year.

Negative monthly returns were reported in five out of the 12 months in the year. This trend is likely to continue and illustrates the need for members to stay focused on the long term, he said.

While we see inflation slowing into 2024, as the impact of the interest rate rises throughout 2023 softens consumer demand, markets are expected to remain sensitive to local and global events. However, as this result illustrates, it has literally paid for members to focus on the long term in 2023.

SuperRatings revealed that global markets accounted for the majority of 2023 gains driven by rising technology shares in the US and supported by strong returns from Australian shares and rising cash returns, off the back of central banks raising rates.

The only sector unlikely to contribute to the rebound is property, which saw a correction during the year and will likely finish 2023 as a small drag on overall returns, said Mr Rappell.

Ultimately, he added: “We saw a strong rebound this year following the negative return in 2022, highlighting the difficulty in timing markets and supporting our focus on long-term performance. The 2022 negative returns reminded members and super funds of the need to think about risk and despite the positive return story in 2023, the elevated levels of volatility over the year mean risk remains a key consideration when responding to market movements.

Super funds deliver ‘pleasing’ gains in 2023

Returns for median balanced funds were positive in 2023, despite “swirling uncertainty and inflation”.

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Maja Garaca Djurdjevic

Maja Garaca Djurdjevic

Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.

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