The value of diversification and staying the course proved itself once again in October, with the median growth super fund (61-80% growth assets) up 0.4% for the month.
This takes the return for the first 10 months of the year to 12.8%, something few would have expected a year ago during the dismal final quarter of 2018 when growth funds lost 4.6%.
According to Chant West, midway through November the median growth fund (where most Australians are invested) is up an estimated 14.3% for the year.
The main driver of positive returns in October was global shares, up 1.9% when hedged for currency fluctuations. This was reduced to a return of 0.4% unhedged, due to a rise in the value of the Australian dollar from US67c to US69c. Global REITs (real estate investment trusts) also performed well, rising 1.8%. Australian REITs were also up 1.4% but overall returns were dragged down by a 0.4% fall in Australian shares.
Chant West senior investment analyst, Mano Mohankumar says: “Even if super fund performance retreats in the remaining six weeks of the year, a positive return for the year would represent the 10th positive calendar year in the past 11.”
However, he cautions investors that this exceptionally positive run is not sustainable with most asset sectors fully valued or close to it and the global economy suffering from uncertainty.
“While there have been signs of progress in traded negotiations between the US and China, those tensions remain unresolved and could quite easily escalate again. There is also the ongoing concern over the pace of global economic growth and, while central banks remain supportive, doubts are being raised about how effective they can be from here on as global growth inexorably slows. Finally, we have the unresolved matter of Brexit and how that will play out,” he says.
Yet despite this seemingly never ending wall of worry, all superannuation risk categories were in positive territory for the 10 months to October 31. All Growth funds were up 17.8%, High Growth 14.9%, Balanced funds 10% and Conservative funds 7.4%.
The following table shows the super performance across various timeframes for five investment categories.
Super fund performance (Results to 31 October 2019)
(% Growth Assets)
Source: Chant West
If you’re interested in the monthly performance for super funds over 5 investment options going back to July 2015, 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?
Learn more about super investing in the following SuperGuide articles:
- Risk profiling and your investment choice
- Understanding the dynamics on which your super fund invests
- SMSF investment rules: What every trustee should know
- How to create an SMSF investment strategy (including examples)
- Super investing: How to choose a responsible investment option
- Super investing: Should you change your investment option?
- Super investing: How to change your investment option
- Super investing: Are you investing in infrastructure?
- Super investing: What are listed and unlisted investments?
- How to choose an investment option for your pension
Learn more about investment performance over calendar years in the following SuperGuide articles:
- Best performing pension funds over 5 years (to September 2019)
- Best performing super funds over 5 years (to September 2019)
- Asset sector performance: Returns over 1 to 15 calendar years (to December 2018)
- Super fund performance over 26 calendar years (to December 2018)
- Best performing super funds over 15 calendar years
- Best performing super funds over 1 calendar year (to December 2018)
Learn more about investment performance over financial years in the following SuperGuide articles: