The median superannuation growth fund lost 1.5% of value for the month of July, and has suffered a massive loss of 5.5% for the financial year to date (July 2011 through to 19 August 2011), according to rating company Chant West.
Looking longer term, the median superannuation growth fund has delivered a 5.0% return for the 12 months to 31 July 2011, and a median annual return 4.9% for the 10-year period to 31 July 2011, according
The recent
Chant West director,
“The global economy faces a number of challenges with the sovereign debt issues in Europe and the US, lacklustre growth in a number of western countries and inflation pressures. However, it’s not all doom and gloom as some parts of the world are still growing solidly and listed companies seem to be healthy from a balance sheet perspective,” says Chant.
Based on Chant West’s rankings, a growth fund typically holds between 61% and 80% in growth assets such as shares and property. A median is simply choosing the return for the fund in the middle of the list.
Although the term ‘growth fund’ covers those super funds with investment options having a 61% to 80% allocation to growth assets, some super funds describe the identical asset allocation as ‘balanced’ option. Chant West’s description of ‘balanced’ however is 41% to 60% in growth assets.
The returns for Chant West’s version of ‘balanced’ option are 5.3% for the 12 months to 31 July 2011, and an investment loss of 0.7% for the month of July. You can find more detail on the investment returns for growth or balanced options in the table below.
The balanced/growth asset allocation is the default option for most large super funds which means that at least 80% of all super fund members have their superannuation money invested via a growth or balanced investment option. If you don’t actively choose your investment options for your super account, then your retirement savings will be invested in the default option.
If you do actively choose your investment option/s then your super savings may be invested in another type of investment option such as conservative or high growth.
The table below lists the performance figures for the five main asset allocations for: 1 month, 3 months, 1 year, 3 years, 5 years, 7 years, 10 years.
| Diversified Fund Performance: Results to 31 July 2011 | ||||||||
| Fund Category | Growth Assets (%) | 1 mnth (%) | 3mths (%) | 1 Yr (%) | 3 Yrs (% pa) | 5 Yrs (% pa) | 7 Yrs (% pa) | 10 Yrs (% pa) |
| All Growth | 100 | -2.8 | -5.1 | 4.2 | -0.4 | 0.2 | 4.7 | 3.2 |
| High Growth | 81 – 100 | -2.2 | -3.6 | 4.6 | 0.6 | 1.1 | 5.1 | 4.4 |
| Growth | 61 – 80 | -1.5 | -2.4 | 5.0 | 1.5 | 2.1 | 5.4 | 4.9 |
| Balanced | 41 – 60 | -0.7 | -1.1 | 5.3 | 2.9 | 2.9 | 5.3 | 4.7 |
| Conservative | 21 – 40 | -0.2 | 0.0 | 5.6 | 3.9 | 4.1 | 5.4 | 5.0 |
Note: Performance is shown net of investment fees and tax. It does not include administration fees or adviser commissions. Negative returns appear as follows: -2.8% means a loss of 2.8%.
Source: Chant West 22 August 2011 media release (www.chantwest.com.au)
Industry funds outperform retail funds, again
According to Chant West, the growth investment options for industry super funds outperformed similar investment options in master trusts/retail funds for the month of July, with industry funds delivering a loss of -1.5% for the month and master trusts/retail funds delivering a loss of -1.9%.
Note: If you annualise this return over 12 months it works out to be a significant 4.8% advantage to industry funds in terms of returns. If this were to occur over a long period, then a member of an industry super fund would end up with a much larger super benefit than the member of the master trust, assuming everything else was equal.
Clearly, a period of one month is a very misleading marker for long-term investment performance, although industry super funds have generally outperformed master trusts over the longer term, with some occasional exceptions.
Industry super funds (5.6%) outperformed retail funds (4.3%) for the 12 months to 31 July 2011, and again for 7 years to 31 July 2011 with industry funds delivering a return of 6.0%, compared with a return of 4.9% for retail funds.
Over the past 10 years to 31 July 2011, industry super funds have outperformed master trusts/retail super funds by 1.3% per annum, returning an annualised 5.6% (industry funds) compared with 4.3% (master trust/retail super funds).
| Industry funds vs retail funds (Growth option performance to 31 July 2011) | |||||||
| Segment | 1 mnth (%) | 3 mths(%) | 1 Yr (%) | 3 Yrs (% pa) | 5 Yrs (% pa) | 7 Yrs (% pa) | 10 Yrs (% pa) |
| Industry Funds | -1.5 | -2.2 | 5.6 | 1.7 | 3.0 | 6.0 | 5.6 |
| Master Trusts | -1.9 | -3.3 | 4.3 | 1.3 | 1.5 | 4.9 | 4.3 |
Note: Performance is shown net of investment fees and tax. It does not include administration fees or adviser
Source: Chant West 22 August 2011 media release (www.chantwest.com.au)
