The median balanced option fell 1.6 per cent over April as sticky inflation caught up with investment markets, according to research house SuperRatings.
The figures are likely to dampen hopes of double-digit returns by June, as had been predicted last month, after the median balanced option generated a return of 1.9 per cent in March, taking the estimated return for the first nine months of the financial year to 8.8 per cent.
However, over the last month, “the reality of interest rates being higher for longer was being digested”, according to SuperRatings executive director Kirby Rappell.
“This flowed through to super returns,” he said.
In April, the median growth option fell by some 1.7 per cent and the median capital stable fell by a more modest 1 per cent, supported by a higher allocation to defensive assets.
Looking at pension returns, the median balanced pension option declined by approximately 1.9 per cent.
The median growth pension option saw a steeper drop of 2 per cent over the same period and the median capital stable pension option fell by some 1.1 per cent.
The research house remarked that a “higher for longer” scenario being priced into markets, bolstered by the Reserve Bank of Australia’s decision this week to hold the cash rate at 4.35 per cent, continues to drive the outlook for returns.
“We continue to believe there will be ups and downs over the coming months; however, funds have consistently demonstrated their ability to navigate changing markets and provide strong long-term outcomes for members,” he said.
“Setting and sticking to a long-term strategy remains the best approach to achieving long-term success and we encourage any member thinking of changing their strategy to seek advice from their fund or a trusted financial adviser.”
Rappell also held a more optimistic outlook for returns, remarking that this marks the first negative return in the calendar 2024 and the first decline in six months.
“We encourage members to remember that this is the first time in six months that superannuation balances have fallen, and funds are still up over 7 per cent for the financial year with two months remaining,” he said.
