In this article you can discover the latest monthly performance for super funds over 5 investment options. We’re grateful to Chant West for providing the research for this article.
For annual and long-term super fund performance see the following SuperGuide articles:
Super fund performance over 27 financial years (to June 2019)
Super fund performance over 27 calendar years (to December 2019)
Could it be that the past few months of furious market activity signified nothing? With only weeks to go until the end of the financial year, super funds look set to finish little changed over the year.
Super funds rose for the second consecutive month in May, with the median growth fund up 2.2% following the 3.1% rise in April. With positive momentum continuing into June, Chant West estimates a flat or mildly positive year is a real possibility. Longer term though, super members should strap themselves in for further volatility.
Chant West senior investment research manager, Mano Mohankumar said: “The surprising share market rally that began in late March came as investors grew more optimistic around coronavirus infection curves flattening around the world, the gradual easing of restrictions and economies tentatively starting to reopen.
“The rally continued into June but has shown some signs of wavering following the US Federal Reserve’s grim outlook for the US economy and concern about a possible second wave of COVID-19 infections.
“From a health perspective we’ve been particularly fortunate in Australia but nevertheless we – along with the global economy – are heading into a recession of unknown depth and duration.
“Given the ongoing economic damage, health concerns and the absence of a vaccine, we should expect market volatility to continue, and fund members will need to remain patient and focus on the long-term prospects for their super.”
Mohankumar says one reason for super funds better-than-expected performance is the diversification of their portfolios. While growth funds have 61% to 80% growth assets, mostly listed shares and property, many also have a meaningful allocation to unlisted and alternative assets to cushion share market weakness.
The experience of COVID-related market volatility in recent months is another reminder of the importance of keeping your eyes on the prize.
“While this financial year’s result may still finish in the red, it’s important to remember that funds have had an unprecedented run since the GFC, returning an impressive 8.4% per annum since the GFC low point in early 2009,” says Mohankumar.
The following table shows the super performance across various timeframes for five investment categories.
Super fund performance (Results to 30 April 2020)
| Fund Category (% Growth Assets) | 1 mth (%) | 3 mths (%) | FYTD (%) | 1 yr (%) | 3 yrs (% pa) | 5 yrs (% pa) | 7 yrs (% pa) | 10 yrs (% pa) | 15 yrs (% pa) |
|---|---|---|---|---|---|---|---|---|---|
| All Growth (96-100%) | 3.2 | -5.6 | -3.0 | 0.2 | 5.8 | 5.8 | 8.6 | 8.3 | 7.0 |
| High Growth (81-95%) | 2.8 | -5.1 | -1.8 | 0.8 | 5.6 | 6.1 | 8.2 | 8.2 | 6.8 |
| Growth (61-80%) | 2.2 | -4.3 | -1.1 | 1.4 | 5.3 | 5.6 | 7.3 | 7.4 | 6.5 |
| Balanced (41-60%) | 1.6 | -3.3 | -0.5 | 1.4 | 4.0 | 4.4 | 5.9 | 6.2 | 5.6 |
| Conservative (21-40%) | 1.0 | -2.3 | 0.4 | 1.7 | 3.7 | 4.0 | 4.8 | 5.3 | 5.2 |
Note: Performance is shown net of investment fees and tax, before administration fees and adviser commissions.
Source: Chant West
To put the recent market volatility into perspective, it’s worth reflecting on the long-term objectives and performance of super.
The chart below shows the year by year performance of the median growth fund since the introduction of compulsory super in 1992. Since then, the median growth fund has returned 8% a year. The annual CPI increase (a measure of inflation) over the same period is 2.4%, giving a real return of 5.6% a year. This is well above the typical 3.5% target set by funds.
Even looking at the past 20 years, which includes three major market downturns – the tech wreck, the GFC and now COVID – super funds have returned 6.5% a year, well ahead of the typical return objective.
Even if this year does turn out to be negative, Mohankumar says it would be only the fourth negative year in 28, or one every seven years. The typical risk objective for growth funds is no more than one negative year in five.
Source: Chant West
If you’re interested in the monthly performance for super funds over 5 investment options going back to January 2016, see the SuperGuide monthly super fund performance Reckoner.
If you’re interested in the performance of lifecycle super funds (including their latest returns), see the SuperGuide article What are lifecycle super funds, and how do they perform?
If you were paying attention mid January the first signs of catastrophe were apparent.
This was the moment when you all had the the choice of converting your superannuation balance to cash thus limiting the substantial losses that took place through February – March and beyond.
Therefore the onus is on the individual to monitor what is going on in the financial world – the share market is an excellent barometer. I personally lost $10,000 from my balance before converting to cash.
This exact behaviour occurred during the GFC and its happened again noticeably across funds.
The problem with moving to cash is knowing when to move back into growth investment options. On average, everyone gets it wrong and loses money.
I studied movements over the GFC, comparing 3bn worth of Choice Super investors with 3bn sitting in MySuper accounts.
6 years after the GFC those who left their money in MySuper products had their balances back. The Choice members? they lost 800m….those same members never got their money back. Gone.
Be very careful trying to pick the market. If your close to retirement you would already be(or should be) in a conservativly managed funds, those funds have maintained members balances.
The smart people let the experts pick the market – thats who your fund manager employs, the customer is not always right.
My advice, and its general in nature 🙂 Don’t gamble with your superannuation.
Super in Australia is a high risk gamble, nothing more. In no way can we trust the massive drops in Super funds as reflecting the true market situation – it is Super funds covering their losses by raiding our accounts.
That the government insists we contribute to Super is appalling. I plan to wait until recovery to Feb levels then empty all of my Super and use it to buy residential real estate. In that way I least have some control and am not subject to Super fund management fear and greed.
Super is a 30 year asset. The high risk gamble over this time period is not to have your money is super.
Cash is low risk over 6 months but high risk over 10 years and very high risk over 30 years.
If you keep your money in cash or 12 month term deposits over 30 years you are guaranteed to lose money. Why, because inflation will eat away at your capital.
Super, invested in a low fee balanced option will grow your money , even after inflation over 30 years. I
I find it absurd that all the while the planet has been dying and vast numbers of people have been suffering, the middle class has continued on their life style trajectories, of international flights, hotels, cruises and other types of needless consumption, pollution and carbon emissions, because they deserve it after “working so hard”. Not once did the middle class vote according to the needs of the planet, the unemployed or homeless, since there are not enough jobs to go around. First it was the pesky bush fires of 2020 that caused us great inconvenience and smoke inhalation and now the “virus we had to have”, as a cover for the white collar crime syndicates to steal your money. Led by blind ignorance and hubris, the middle class continued to support and trust the same system that rewarded them, but punished everyone else (Centrelink). One day they did awake, but only after the smoke had lifted and their money was gone. I have no sympathy, but welcome to the real world anyway comrade!
I seriously want to cry right now. I have 10 years to go before I was going to retire and my super was on track with fabulous ROI. This month I have lost over $50,000k in the last month from the stockmarket drop. One third of my super is completely wiped out.
HI Michelle
lots of working people are facing the same nightmare. I am going to retire in 4 years and my situation is worst of yours. The superannuation system IN AUSTRALIA is not safe and my question is ,why the Government encouraging all of us to put more and more in this bloody funds which are not secure ?? Doesn’t matter which way you decide to invest your money…you lose anyway. The contribution system MUST be changed like in Europe where at the end of you working life you receive the pension you deserve which will be safe until you die. The more you work the more you receive. HERE in Australia is the opposite!! PITY!!!!!