Returns on balanced superannuation fund accounts are likely to come in at between five and eight per cent for 2014, according to the country’s leading research houses.

Funds defied stock market volatility and tapering interest rates to lodge strong positive returns, however the double-digit highs experienced in 2012 and 2013 were unlikely to be repeated in 2014.

The selloff of blue chip mining stocks in recent months also had an effect, prompting asset managers to reweight equity portfolios to income-generating stocks such as utilities.

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Warren Chant, director of superannuation research house Chant West, says 2014 represented “a return to normality” following the negative returns that flowed from the Global Financial Crisis and a series of unusually high returns in recent years.

“Despite share market nervousness continuing into December, it’s almost certain that we’ll see a positive return – most likely in the range of five to eight per cent barring anything exceptional occurring,” he said.

That, Mr Chant believes, “should be seen as a solid result”.

International shares shone in 2014

Foreign shares boost nest eggs.

The big winners this year were people who had all or a large part of their super money exposed to international shares.

The recovering US equities market underpinned the spectacular growth of most international share investment products with the depreciating Australian dollar giving an extra boost.

Super funds’ international share products are not fully hedged against currency movements which means the value of American shares measured in Australian dollars increases as the Aussie dollar depreciates.

Members who were exposed to such products achieved median returns above 13 per cent in the 12 months to the end of October, according to Super Ratings.

Among the standout international share investment options offered by industry funds were HESTA’s “Your Choice International Shares” and Care Super’s “Overseas Shares” products, which both posted returns of more than 18 per cent in the last 12 months.

Australian Super’s unhedged international shares product has delivered a return of more than 17 per cent.

Property not far behind

Profits in property.

Super members with greater exposure to property mostly enjoyed higher returns than members of balanced funds in 2014.

The median return on property investment options for the year ending in October was 11 per cent, according to SuperRatings.

However, many super funds exceeded the benchmark with Media Super posting a 20 per cent investment return on its property option in the 12 months to the end of November.

Cash not king

Placing your super in cash might be the safest investment option, but it came at a significant cost in the 12 months to the end of October.

With inflation at 2.3 per cent and the Reserve Bank’s official cash rate at 2.5 per cent, most investors selecting this asset class struggled to grow the real value of their super in 2014.

The average return on cash deposits by super funds was only 2.4 per cent.

SOURCE: SuperRatings