A super start to the year

There are two sides to every coin, so the saying goes. And it seems that epigram certainly holds true in the world of finance. (As it should really, given the saying’s reference to a coin.) Yesterday, YourLifeChoices reported on spiralling credit card debt in the months since Christmas. Today, a good news story for those with superannuation. Super balances and pension returns both had a very strong month in March.

In the case of super, the monthly gain was a continuation of a strong start to the year for superannuation. The estimated return for the first nine months of the 2023-24 financial year currently sits at 8.8 per cent. Another strong quarter could produce a 12-month return of double digits by year’s end.

Executive director of superannuation research house SuperRatings Kirby Rappell said: “We have continued to see fund balances grow, despite ongoing uncertainty over the inflation outlook both here and abroad.”

Super and pension funds – the news in detail

Balanced option superannuation accounts saw a median increase of 1.9 per cent in March, taking the year-to-date earnings to 8.8 per cent. The growth option median reflected a very strong month, with a 2.3 per cent increase. Across nine months this financial year, it has generated a 10.5 per cent return.

The more conservative capital stable option also enjoyed a productive month, taking its year-to-date return to 5.5 per cent. That’s still above the current CPI of 4.1 per cent.

The past month was good for more than super funds alone. Pension funds also experienced a profitable March. The growth option generated a 2.6 per cent increase and the balanced option rose 2.2 per cent. This took their nine-month increases to 11.6 per cent and 9.9 per cent respectively.

The stable option rose 1.2 per cent in March, taking the year-to-date increase to 6.0 per cent, again above CPI.

Australia’s largest fund AustralianSuper experienced strong growth in the March quarter, epitomising the industry overall. Its flagship balanced option (accumulation), where most members are invested, returned 4.56 per cent for the March quarter. 

Bouncing back from COVID

The March results continue a sharp rise in returns over several months, the strongest growth since before COVID. But while the superannuation graphs continue to point northward, Mr Rappell believes post-pandemic volatility remains possible.

“The COVID pandemic was a major event for financial markets around the world,” he said. “While balances have recovered, we continue to see greater ups and downs in returns than prior to the pandemic. With the benefit of hindsight, it is fair to say that we didn’t expect the strength of the returns experienced since the depths of the pandemic.”

However, the likely strong super returns for the 2023-24 financial year 2024 are not necessarily going to continue. “The ups and downs are expected to remain,” Mr Rappell said. “We encourage members to focus on longterm outcomes when reviewing their retirement settings.”

AustralianSuper’s chief investment officer Mark Delaney echoed those sentiments this week. “The [AustralianSuper] portfolio is well positioned to provide a balance of growth potential and downside protection. As always, it’s important for members to remain focused on the long term.”

How has your super fund performed over the past quarter? Have you been surprised by the strong growth? Let us know via the comments section below.

Also read: Super at age 80 – will you have enough?

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