Finance Your Super Super funds reverse last years losses as returns jump in 2019

Super funds reverse last years losses as returns jump in 2019

Super funds have emerged from the recent market downturn in top shape. Photo: Getty
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The recent slowdown in markets has done little to hurt super fund returns, with Australia’s retirement savings managing to reverse last year’s losses over February.

Coming off the back of a tough 2018, the median balanced fund option managed to deliver 2.6 per cent in February – its highest monthly return since July 2016 – according to new figures from SuperRatings.

The median growth option did even better, returning 3.3 per cent over the month, according to figures form SuperRatings.

Australian shares options performed particularly well, returning 5.4 per cent while international share options closely followed with 4.2 per cent.

The strong market performance sits in stark contrast to the four consecutive months of losses endured at the tail-end of 2018, and members invested in the median balanced option have even staged a full recovery.

Median balanced option returns to 28 February 2019
The median balanced option return sat at 2.6 per cent in February Graph: SuperRatings

“Super fund performance over the last six months has been a great example of the sector’s resilience in challenging market conditions,” said SuperRatings executive director Kirby Rappell.

The recovery has been lead by investors regaining their confidence and share markets bolstered by a generally positive earnings season.

“Markets have generally reacted favourably to the recent round of earnings in Australia and the US, while trade tensions have eased and central banks have backed away from further tightening. But most participants expect volatility to return in the near future, meaning funds must remain focused on long-term performance.”

Growth in $100,000 invested over 10 years to 28 February 2019
The positive performance has helped boost total balances. Graph: SuperRatings

February’s results have also bolstered total balances’ ten year growth, with $100,000 invested in the  median balanced option ten years ago ballooning to $227,149 by today’s figures, and the same amount in the median growth option similarly growing to $$246,246 over the same period.

Placing $100,000 in domestic and international shares in 2009 would now be worth $270,252 and $278,415 respectively.

To put these figures in perspective, $100,000 invested in the median cash option ten years ago would only be worth $129,990 today.

Australia’s top ten performing funds

Australia’s top-performing funds continue to deliver for members, with TelstraSuper’s top-ranking balanced option returning 9.7 per cent per annum over the past 10 years, followed closely by industry funds QSuper and UniSuper.

Top performing Balanced (60-76) funds
Australia’s top-performing funds continue to deliver for members. Graph: SuperRatings

The rankings show how tight competition is among Australia’s leading funds when it comes to long-term performance.

Mr Rappell said the results highlight the need to ensure members continue to have a wide range of high-performing funds to choose from.

“If you look at the top 20 performing super funds, each of them have achieved an average return of over 9 per cent per annum over 10 years,” he said.

“Over time it is common to see movement up and down within the rankings, and this is good for members because it shows there is competition within the sector.”