Superannuation returns were in positive territory in August with balanced funds returning 0.6 per cent after eking out a 0.1 per cent return in July, according to research house Chant West.

This brings the cumulative return for the first two months of the 2017/18 financial year to 0.7 per cent.

SuperRatings also measured a rise of 0.6 per cent for balanced funds in August with chairman Jeff Bresnahan warning that recent good times may be finishing.

“Super funds have enjoyed a remarkable run in recent years, but members should be reassured that funds are increasing their focus on downside protection,” said Mr Bresnahan. 

“The importance of super as a driver of household wealth is increasing, with greater reliance on super for many, particularly for those members that are part of generation rent. Funds continue to perform well against a CPI plus 3 per cent objective over one, three five and seven years, although the impact of the Global Financial Crisis (GFC) remains evident in 10-year outcomes,” Mr Bresnahan said.

Chant West director, Warren Chant said “the modest start to the financial year was to be expected. The 10.8 per cent return achieved in the year to June was something of a surprise, and it would be even more of a surprise if that is matched or beaten this year.”

“While the economic outlook is much better than it was a year ago, both listed and unlisted assets have had a great run and most asset sectors are now fully valued or close to it,” Mr Chant said.

The above table compares the performance since July 1992 – the start of compulsory superannuation – of the growth category median fund 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 have seen the five year performance tracking well above that CPI plus 3.5 per cent target, Chant West found.

Industry funds and retail funds performed in line with each other in August, returning 0.6 per cent. However, industry funds 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, Chant West found.

“In August, 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 per cent,” Mr Chant said. However, escalating tension between the US and North Korea weighed on investor sentiment, as did Hurricane Harvey which caused such damage in Texas and neighbouring states, Mr Chant said.

“The economic data coming out of Europe remained positive. 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 again kept interest rates on hold at 1.5 per cent earlier this month, citing the continuing improvement in global economy,” he said.