Bumper investment gains in the March quarter have put most super members in line for double-digit returns this financial year, according to leading research house SuperRatings.

In the nine months to the end of March, the average return of balanced funds was 10.8 per cent. That’s well above the long-term annual performance of balance funds, which stands at around 6.8 per cent.

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Some super funds have managed to generate above average returns for members in the nine-month period to the end of March.

They include:

• UniSuper – 12.94 per cent
• Energy Super – 11.94 per cent
• Care Super – 11.87 per cent
• AustralianSuper – 11.4 per cent

Australian workers have all or most of their superannuation cash invested in balanced funds.

Typically, balanced funds invest up to 75 per cent of their pooled cash in shares and the rest in a range of assets such as government bonds, property and bank deposits.

Returns slow in March

Volatile share markets in Australia and overseas meant that balanced funds garnered average returns of around 0.6 percent in March.

Most of the growth for the quarter was attributable to particularly strong share market gains in January and February.

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SuperRatings founder Jeff Bresnahan said most super funds were now well positioned to post double-digit returns for the financial year, despite volatility in equity markets.

“The March result takes the number of positive monthly returns to eight out of nine, this financial year,” Mr Bresnahan said.

“Despite uncertainty about Australian and global growth, super funds have enjoyed a strong financial year to date.”

Balanced funds are mostly exposed to Australian and international shares, but also hold defensive assets such as government bonds.

The benchmark S&P/ASX 200 index has advanced by nine per cent in the nine months since July 1 last year.

Members who invest their retirement savings in balanced funds benefitted from the share rally and their returns were augmented by the high dividend payout policies of blue chip companies such as Telstra, Commonwealth Bank and Westpac.

A factor behind some funds posting below-average returns was their relatively higher exposure to mining and energy stocks.

Shares of ASX-listed resources companies such as BHP, Fortescue Metals, Woodside and Santos tumbled in the last year as international demand for commodities tapered.

The negative market reaction was particularly extreme for investors in Fortescue and Santos, which both halved in value.

Investors scramble to beat inflation

While super members exposed to balanced fund investment options have reasons to celebrate, the low interest rate environment has eroded returns to conservative investors.

Tapering interest rates in the last year mean that investors exposed to cash through their super fund are barely managing to maintain the value of their retirement savings against inflation.

The cash investment option basically means you are investing in bank deposits.

AustralianSuper’s cash investment option posted a return of only 1.72 per cent for the year so far.

HostPlus members who invested in the fund’s cash option garnered a net return of 1.56 per cent for the period.

Members fared better if they were exposed to fixed interest investment choices, which are weighted to government and corporate bonds.

HostPlus’ diversified fixed interest fund has generated a net return of 4.9 per cent so far this year, while HESTA’s global bonds option has harvested 5.62 per cent.

Although conservative investors have missed out on the bumper returns of the past few years, their investment strategies are more likely to outperform those of growth investors when share markets lose ground.