Average superannuation returns have continued to decline, and a negative return for the financial year is on the cards for many fund members.

Data release on Monday, by superannuation research firm SuperRatings, showed February was the fifth negative month in a row for superannuation funds.

The median balanced option return was down 0.5 per cent in the month, taking the financial year-to-date return to negative 1.6 per cent.

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“Eight months into the financial year, it is becoming clearer that returns will not repeat those of the past three years, where the median balanced option had recorded double digit returns by this stage of the financial year,” SuperRatings chairman Jeff Bresnahan said.

“A further concern will be whether we see a positive median return by the end of the financial year.”

Mr Bresnahan said the current financial year had been presenting a range of challenges to superannuation funds and their members, with most funds recording a small loss for the first eight months of the year.

“It always remains a challenge for members, as we have seen strong returns and growth in account balances in recent years, which are now being tempered by uncertain markets,” he said.

“The lower return environment remains difficult for funds, but members must remember that over the long term, most superannuation funds continue to perform well against their objectives.

Source: SuperRatings

“A key challenge for members remains growing their balances to meet their retirement needs. This involves working to maintain exposure to growth assets that have performed well over the long term, while ensuring risk is minimised.”

Mr Bresnahan said higher growth portfolios have borne the brunt of market volatility, although it was expected that most members invested in these options were earlier in their accumulation phase and have a higher ability to withstand these conditions.

“Capital stable options, which are much more likely to be used by members in and around retirement, recorded a 0.05 per cent fall for the month but remain in positive territory for the financial year to date,” he said.

“Cash and diversified fixed interest returns remain subdued, with the median cash and diversified fixed interest options up 0.2 per cent and 0.5 per cent respectively, although these returns were some of the strongest for February.”