Super funds on the rebound
SUPER funds rallied 2.5% in January, recouping all the losses of the 2011 calendar year in a single month.
According to the latest numbers from industry analysts, funds in the median growth option – where most people keep their super – notched substantial gains last month largely on the back of Australian shares.
Research company SuperRatings said the best Australian shares outperformed the market, returning 7.1% after fees and taxes in January. Other factors contributing to the boost included high yield corporate debt, international shares, extra liquidity and a renewed confidence in investors.
“The strong share market performance in January was on the back of positive economic data coming out of the US, which indicated that the US economy is showing signs of strengthening,” Chant West director Warren Chant said. “And although the debt problems persist in Europe, there are signs that the recession in the region may end up being relatively mild. Since the end of September 2011, international share markets have now rallied 17% in hedged terms.”
The encouraging figures so far this year has given rise to optimism that fund performance has turned a corner after facing significant international headwinds and volatility in 2011. While a surge is not necessarily predicted for 2012, the positive traction experienced last month provides some confidence that fund members may see their super balances grow this year.
The seemingly indomitable impact of the global financial crisis, however, has meant that full recovery from the huge losses of 2008 is still a long-term issue.
“Despite the positive news in 2012 to date, and the fact that growth funds have returned a healthy 29% since listed markets bottomed in late February 2009, it’s sobering to think that they still need another 7% to get back to their pre-GFC (October 2007) highs,” Chant said. “That just shows the severity of the impact of the GFC, which is still being reflected in the medium- and long-term performance figures.”
The data in the following tables is provided by SuperRatings.
Highlights (median balanced option)
| Month of January 2012 | +2.28% |
| 3 Months to 31 January 2012 | +1.10% |
| Financial Year to 31 January 2012 | -1.45% |
| Rolling 1 year return to 31 January 2012 | -0.71% |
| Rolling 3 year return to 31 January 2012 | +6.48% |
| Rolling 5 year return to 31 January 2012 | +0.37% |
| Rolling 7 year return to 31 January 2012 | +4.39% |
| Rolling 10 year return to 31 January 2012 | +4.88% |
Best and worst fund option performance over last 12 months
| Option type | Highest | Median | Lowest |
| Balanced (60%-76% growth) | 4.2% | -0.7% | -4.5% |
| Growth (77%-90% growth) | 3.2% | -2.3% | -7.1% |
| Capital stable (20%-40% growth) | 7.0% | 3.4% | -0.1% |
| Australian shares | -2.0% | -5.7% | -9.3% |
| International shares | -2.0% | -7.3% | -12.2% |
| Property | 8.5% | 4.3% | 3.8% |
| Diversified fixed interest | 11.8% | 8.1% | 3.5% |
| Cash | 5.1% | 4.3% | 2.2% |
