It’s no easy task to track down good news about finance in the current economic climate. However, we have managed to unearth one little gem in the world of superannuation. There were positive super returns in the month of July in a number of sectors.
That’s the good news. The bad news is that August isn’t looking quite as good.
But let’s focus on the good news first. The latest data analysis from superannuation research house SuperRatings shows funds made a great start to the new financial year. On the back of a strong 2023-24, the median return on balanced super options in July was an impressive 1.9 per cent.
The median growth option returned 2.4 per cent, while growth in the median capital stable option was a more modest – but still very respectable – 1.3 per cent.
Pension funds followed a similar trend. The median balanced pension option rose by an estimated 2.2 per cent, and the median growth option 2.5 per cent. As with super, the capital stable pension option return was more modest, rising by 1.5 per cent.
“We saw returns retaining their momentum from last financial year in July,” said Kirby Rappell, executive director of SuperRatings. This was a good start to the financial year, he said.
And now, the not so good super news
Sometimes the super lords giveth, and sometimes they taketh away. And it seems August has been marked on the 2024-25 calendar as a ‘taketh away’ month this time around. While the month is only just over halfway through, significant market sell-offs threaten to wipe out July gains.
“We saw returns retaining their momentum from last financial year in July, setting up a good start to FY25,” said Mr Rappell. “However, markets have since seen a strong sell-off,” he explained. This has resulted in an estimated -1.7 per cent return for balanced options over the first two weeks of August. The effect is that super funds have largely given back the July result, Mr Rappell said.
The Reserve Bank of Australia is pushing back against calls to further lower interest rates, holding steady for now. This, combined with the current volatility in share markets, points to a potentially bumpy few months ahead, Mr Rappell believes.
“We expect to see continued ups and downs for fund returns over the coming months,” he said. This instability would be driven by “central banks responding to changes in conditions and significant geopolitical events play out”.
What should Aussie fund members do?
The short answer is, don’t panic. While the July numbers are great and the August ones anything but great, it pays to remember that superannuation is a ‘long game’. Ruminating on the August super ‘blooper’ is unlikely to result in anything but raised anxiety levels.
“Funds have consistently proven their ability to deliver over the long term,” Mr Rappell said. “We encourage members to focus on blocking out short-term noise in favour of longer-term outcomes.”
Of course, if you have specific concerns regarding your own super fund, you should chat to your registered financial adviser. Otherwise, following Mr Rappell’s solid advice is probably your best option.
Do you keep a constant eye on your super balance? Or are you happy to wait for your yearly statement? Let us know via the comments section below.
Also read: Most Aussies don’t know how super works
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