Money Your Super Superannuation returns rose 1.5 per cent in the September quarter
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Superannuation returns rose 1.5 per cent in the September quarter

Super grows.
Superannuation funds grew modestly in the September quarter. Photo: Getty
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Super funds progressed modestly in the September quarter with the median growth fund up 1.5 per cent for that period, according to research house Chant West.

Industry funds outperformed retail funds in September (1 per cent versus 0.7 per cent ) and over the September quarter (1.7 per cent versus 1.4 per cent). Industry funds also continue to hold the advantage over the medium and longer term, ahead by between 0.7 per cent and 1.3 per cent per annum, as this table shows.

Industry funds outperformed.

Chant West director, Warren Chant, was optimistic on the world economy. “Around the world, with a few exceptions, economic conditions continue to improve.”

That improvement seems to be driving share markets. Australian shares grew a modest 0.8 per cent return for the quarter while international shares fared much better, gaining 4 per cent.

However a stronger Australian dollar (up from US77c to US78c) reduced the gain on foreign shares to 2.5 per cent in unhedged terms. Listed property was also up, with Australian and global REITs advancing 1.9 per cent and 1 per cent  respectively.

Along with Australia he other main laggard in world markets has been the UK,  which is  beset by uncertainty about the ramifications of Brexit, Mr Chant said.

“Over the quarter, macroeconomic data in the US was generally positive, including GDP growth for the June quarter being revised upwards from 2.6 per cent to 3.1 per cent,” he said.

Economic data out of Europe also remained positive with the European Central Bank discussing various possibilities to ease its stimulus measures without issuing firm details, Mr Chant said.

“In the Asia Pacific, the Chinese economy continues to show signs of improvement which is good news for Australia given our strong trade links. Back home, the RBA has kept interest rates on hold at 1.5 per cent, citing the continuing improvement in the global economy,” he said.

Superannuation continues to perform well in the longer term will all categories of fund meeting their long-term return objectives, which range from CPI + 2 per cent for conservative allocations to CPI + 5 per cent for all growth funds over one, three, five and seven and 15 years.

However, the GFC continues to weigh down the 10 year returns with only the conservative category meeting its objective over this period.

The next chart compares the performance since July 1992 – the start of compulsory superannuation – of the growth category median with the typical return objective for that category (CPI plus 3.5 per cent per annum after investment fees and tax over rolling five year periods).

The healthy returns in recent years, and with the GFC period now out of the calculation, have seen the five year performance tracking well above that CPI plus 3.5 per cent target.