Super Funds Gain During March

Post by Sharat on April 23, 2009 · Under Capital Markets, Equities, Wealth Management, investments · Comment 

Australian Super Funds have seen their first monthly investment gains since August 2008 on the back of a global rally in equities which has occurred over the last five weeks. Gains at some super funds were paired due to a stronger Australian Dollar and unlisted assets which had to be revalued.

The median super funds increased by 2.2 per cent during March according to a report issued by research company SuperRatings. The broader Australian equity market gained 7.1 per cent. The gain comes after six months of losses and a loss of 3.6 per cent in February.

“Whilst strong in real terms, it was somewhat below the expectations given that the world sharemarkets surged,” SuperRatings managing director Jeff Bresnahan.

Mr Bresnahan said the rising Australian dollar offset gains for funds with a primary focus on international shares without currency hedging. Those funds with a fully hedged exposure to the Australian dollar returned up to 10 per cent for the month, compared to similar funds with no currency management that lost up to two per cent.

“This highlights the effect different hedging strategies can have on fund performance,” he said.

Those who stayed in a balanced fund for five years up to March this year could expect a compound return of between 5.3 per cent to 7.2per cent for the top 10 funds. The best performer was MTAA Super Balanced Fund, which returned 7.2 per cent. Among the top growth investment super funds, the annual compound returns varied from 4.3 per cent to 5.6 per cent if the person remained in the fund for five years. The best performer was Hostplus Shares Plus super fund.

Those who invested in Australian shares only for the past five years could expect an annual compound return between 6.2 per cent to 7.5 per cent for the top 10 performers. The best performer was Hostplus Australian Shares super fund.

Those who chose to invest only in international shares over the past five years suffered the biggest losses, with returns of minus 1.8 per cent to a positive 0.6 per cent among the top 10 performers. Catholic Super Overseas Shares returned 0.6 per cent.

Super funds have lost 16.5 per cent to date in 2008-09. With another three months to go before the end of the financial year, Mr Bresnahan said it was likely corporate and industry funds would deliver double-digit losses this year.

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