Super fund returns took a slight hit in August, as yet another interest rate rise put downward pressure on financial markets.
The median balanced super option delivered a -0.5 per cent return for the month, according to financial research group SuperRatings.
The median capital stable option also recorded a 0.5 per cent drop, while the median growth option fell 0.4 per cent.
Pension returns also decreased in August, with the median balanced pension option down roughly 0.6 per cent, while a fall of 0.5 per cent was estimated for the median growth option and 0.6 per cent for the median capital stable pension option.
Read: Most funds would have passed super performance test
The dip comes on the back of strong returns in July and has been driven by falls in the broader share market. In turn, share market losses are being caused by consecutive rate rises that are aimed at curbing rampant inflation.
While average monthly returns were down, along with returns over the past 12 months, returns over three-, five-, seven- and 10-year periods are still safely in positive territory.
SuperRatings executive director Kirby Rappell says the result highlights the importance of sticking to a long-term investment strategy and not reacting to momentary ups and downs.
“Over the month of August, we have seen a slight pullback in the strong recovery in returns we saw in July,” he says.
Read: Super funds post positive returns in July
“While it is a small negative result this month, this reflects the volatility across investment markets, with elevated inflation levels continuing to pose challenges.
Mr Rappell also noted that the Reserve Bank of Australia’s (RBA) four consecutive official rate rises in the months leading up to August had put the brakes on any potential returns. The RBA has raised the cash rate for a fifth month (up to 2.35 per cent) since the SuperRatings analysis was compiled.
“Another interest rate rise impacted investment returns, though the silver lining here is that this may benefit retirees who are deriving an income from their pension accounts through exposure to cash.”
The news is good, however, for those who hold money in a savings account. Although still too early for some banks to add September’s rate rise, a few banks have been quick out of the blocks.
Read: Low-income homeowners feeling the pinch of rate rises
Of the big four banks, only the Commonwealth Bank (CBA) and Westpac have increased their savings rates. CBA lifted its GoalSaver account to 2.10 per cent, while Westpac lifted its Bump Savings account rate to 2.35 per cent.
Outside of the big four, ING has increased its Savings Maximiser accounts to 3.60 per cent per annum, ubank has increased its Save and USave accounts to 3.35 per cent and St George bank has increased the Incentive Saver Account rate to 2.85 per cent.
Was your super fund’s return down in August? Are the RBA rate rises hurting or helping your budget? Let us know in the comments section below.
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