Superannuation fund members have seen their holdings bounce back from the stockmarket hits at the beginning of the month, with Chant West reporting median growth fund valuations now 1.4 per cent higher than at June 30.

That would result in a fund valued at $150,000 on June 30 now being worth $152,100 just shy of two months later.

The research group said July was a good month for superannuation. For example, the median growth or balanced fund featuring between 61 and 80 per cent growth assets experienced 2 per cent growth.

That performance was driven by good news from both share and bond markets, which both performed well.

Strong July

Over July, Australian shares surged 4.1 per cent and international shares were up 1.2 per cent.

However a weaker Australian dollar saw unhedged international share returns up 4.1 per cent and local and international bonds rise 1.5 per cent and 1.9 per cent respectively, Chant West research chief Mano Mohankumar said.

The heavy knock experienced by sharemarkets in early August saw balanced super accounts lose 2.1 per cent, SuperRatings said. But recovering markets have made those losses disappear.

“With volatility returning to sharemarkets in early August, it’s an opportune time to again remind super fund members of the
importance of maintaining a long-term focus and not panicking,” Mohankumar said.

Selling or moving into conservative allocations while markets are falling locks in losses and prevents members benefiting from recovery.

“We know from past experience that sharemarkets, which
remain the main drivers of growth fund performance with a 55 per cent allocation on average, can be incredibly resilient,” Mohankumar said.

That resilience can be seen looking at the market over time, with Chant West tables showing the growth option returning 9.6 per cent for the year to July 31.

Over 10 years the figure was 7.3 per cent despite market hits during Covid and other periods of market volatility.

We can also see that the top-performing balanced funds using SuperRatings’ slightly lower growth asset limit of 67 per cent were well into double figures in the June year.

Only No.10 on the table dropped below double figures but still delivered a healthy 9.9 per cent return.

To get a good look at fund returns over time SuperRatings website allows you to look at the top 10 performers in different asset allocations back over one, three and five years which will help you get a longer-term perspective on how your fund is performing.

Part of fund performance relates to the costs your fund incurs managing your  money so it might be wise to look at the table below detailing the cheapest fees on offer in different funds.

Then you could compare these to your own fund to get a sense of whether you might be overpaying on management fees. Remember that it’s not all about fees though.

If your fund is making good returns on investment then you can afford not to have rock-bottom fees and still come out in front.

The performance of super funds since compulsory superannuation was introduced back in 1992 has exceeded expectations with returns on the median growth fund coming in at 7.9 per cent, Chant West reports.

The annual CPI increase over the same period is 2.7 per cent, giving a real return of 5.2 per cent annually – well above the typical 3.5 per cent target the industry had been expecting back in 1992.

“Even looking at the past 20 years, which includes three major sharemarket downturns – the GFC from 2007 to 2009, Covid-19 in 2020, and the high inflation and rising interest rates in 2022 – super funds have returned 7.3 per cent annually, which is still comfortably ahead of that typical objective,” Mohankumar said.

Play the long game

SuperRatings executive director Kirby Rappell warned fund members to stay focused on the longer term and ignore short-term volatility.

“Most of us will have plenty of time until we retire and begin to access our superannuation and therefore it is important to block out as much of the noise as possible and focus on how we are doing over the long term,” Rappell said.

Legislation requiring the payment of the superannuation guarantee on paid parental leave was introduced to Parliament on August 22 in a move strongly supported by the industry super sector.

Aware Super CEO Deanne Stewart said her fund had been advocating for the change for many years, saying it would deliver significant benefits to women who typically retire with significantly lower balances than men.

“We’re only too aware that caring duties fall disproportionately to women, and we want to see action now to help ensure they are financially secure in retirement,” Stewart said.

The New Daily is owned by Industry Super Holdings