Poor superannuation performance kicks off new year

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The new year has started off slowly for superannuation members whose median balanced funds dropped by -0.9% for the month of January.

The poor performance was a reflection of the markets, which saw growth assets fall across the board. The median superannuation Australian shares option fell by -2.7% compared to a -3.0% drop in the S&P/ASX 200 accumulation index over the month. Abroad, international shares also performed badly.

But the news is not all bad, says Jeff Bresnahan, founder and chairman of superannuation funds database SuperRatings.

“When the share market goes down it drags SuperFunds down with it, but February has been very strong so these losses have been pretty much re-cooped already,” he told Wealth Professional.

Returns across all other asset classes remained positive in January, offsetting some of the falls in Australian and International equities, according to the SuperRatings report.

This means that despite January’s “hiccup”, this financial year will hopefully see a double digit return, Bresnahan said.

The report also highlighted returns for members investing in the best and worst performing funds, with stark differences evident.

An initial $100,000 invested in REST’s core strategy option in January 2004 would have more than doubled to $221,011 today. In contrast, a member invested in the worst performing fund would have only seen their initial investment return 53% over the same period.

Bresnahan said results like these emphasise the importance of understanding the SuperFund market.

“We’re trying to show people that the SuperFunds aren’t the same. They look the same, but perform differently,” he said. “You need to be careful about which funds you choose, and review them every five years or so. Your whole retirement hinges on it.”

SEE MORE:

Bumper year for super funds

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  • Fred Smith on 25/02/2014 2:20:47 PM

    That is a shock. The median super fund went backwards at exactly the same time as the market. Who would have ever predicted that?

  • SB on 25/02/2014 3:28:28 PM

    I would add that the difference in the best and worst performing fund may highlight the difference in asset allocation and risk. Is a balanced fund 80% growth or 50%?

  • Pat on 25/02/2014 3:50:38 PM

    Fred, what are you talking about? Are you saying there is a correlation between market performance and super fund performance? That's crazy talk.

    Why does Bresnahan need to make a comment about such an inane issue as 1 month performance that even a monkey could have guessed?

  • GAB on 25/02/2014 5:40:46 PM

    I think what they're trying to do is promote a certain super fund.

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