Super funds fight back in August

Australia’s super funds continue their long march towards recovery, with the average balanced fund climbing 3.12% in the month of August, the sixth month in a row that super fund returns have been in positive territory.

According to new data from SuperRatings, the rally in equity markets mean that the average balanced super fund has posted a 14.3% gain since March, and an impressive 6.8% gain across the months of July and August.

The average return for balanced funds is now down 7.93% over the last 12 months, while SuperRatings managing director Jeff Bresnahan says that another month of good returns in September should push the rolling three-year back into positive territory; it currently sits at 0.19%.

Bresnahan says research of super fund members’ investment strategies shows pre-retirees have been largely unshaken by the market crash of the last 18 months.

Just 3.3% of pre-retirees shifted their investments from an “aggressive” style fund to a “conservative” fund, compared to post-retiree, who moved 12% of funds into conservative funds.

Retirees now hold around 14.5% of their super in cash options compared to just 3.7% for pre-retirees. But ironically, the laid-back approach taken by most pre-retirees is actually helping them right now, as equities are performing better than cash.

“So these significant short-term movements in markets certainly appear to be affecting retirees more so than those still generally apathetic pre-retirees, as poor market timing can significantly impact benefits,” Bresnahan says.