After a rocky April, average super fund returns stabilised in May, recording a 1.0 per cent profit for the month, according to figures from superannuation ratings house SuperRatings.
While an improvement over April’s results, the return wasn’t enough to completely reverse last month 1.6 per cent fall.
The median growth option grew by an estimated 1.1 per cent for the month, while the median capital stable option, rose by a more modest 0.6 per cent.
Kirby Rappell, executive director at SuperRatings, says last month’s result was something of an anomaly and the superannuation market as a whole is set to close out the financial year in the black.
“As we approach the end of the financial year, funds will be seeking to consolidate the strong returns over the past 11 months” he says.
“Despite the pull back in April, 2024 is looking to be a competitive year for fund performance.”
Mr Rappel says that despite economic uncertainty both here and internationally, the largest Australian funds have been able to weather the storm.
Inflation is still uncomfortably high, which is in turn keeping interest rates elevated, which appears to be spooking the market and stopping the kid of share market climbs that usually boost super returns.
Pension returns also stabilise
For funds in the pension stage, returns followed a similar pattern. The median balanced pension option grew by 1.1 per cent in May, with the median growth pension option only outpacing it by 0.1 per cent with a 1.2 per cent return.
The median capital stable pension option delivered an estimated 0.7 per cent.
Long-term return still healthy
Mr Rappel counsels anyone who is concerned with the current economic climate and its impact on their super, to look at the long-term return picture for their fund.
“We encourage members to block out the current market noise and focus on long-term strategy as the ups and downs are likely to continue for the foreseeable future,” he says.
He says most funds will return a profit for the financial year and some will even see profits greater than 10 per cent.
“Funds are on track to deliver high single digit returns for the financial year, with more growth focused options potentially reaching double digits if we see current momentum carry through June” he says.
“Most members should take comfort from funds achieving a second consecutive year of positive returns after the seesaw of returns over the past few years, as it further reinforces funds’ ability to navigate challenging investment markets”.
As always, Mr Rappell says to not get too caught up in short-term returns, as super is a long-term game and its still trending upwards over a 10-year period.
“Uncertainty remains high here and abroad around economic resilience and interest rates,” he says.
“However, to date, the resilience of super fund returns should be a source of some comfort for super fund members.”
How was your fund’s performance in May? Are you on track to end the financial year in profit? Let us know in the comments section below.
