Retirement
Super funds deliver slim January gains
Superannuation funds have made ‘a small but positive result’ at the start of 2021, although the pandemic still poses a significant risk to future returns, new research has revealed.
Super funds deliver slim January gains
Superannuation funds have made ‘a small but positive result’ at the start of 2021, although the pandemic still poses a significant risk to future returns, new research has revealed.
SuperRatings research showed that super funds returned members on average 0.4 per cent for both the median balanced option and median growth option.
The median capital stable option also had a positive return for members, growing by 0.1 per cent on the month.
SuperRatings highlighted that this is now the 10th straight month of gains for super funds, following a shaky start to last year when the pandemic saw markets in free fall.
The consultant's executive director Kirby Rappell said super funds have had a promising start to 2021, but the risk from the COVID-19 pandemic isn’t over yet.
“Movements in financial markets are still closely tied to how governments are managing new COVID-19 cases, as well as the timing and efficacy of vaccines. In short, we expect more ups and downs in the market, and super funds are not immune,” he said.
Despite the pandemic and economic falls, overall for the financial year, the superannuation sector has outperformed expectations, returning 9.1 per cent.
SuperRatings said current trends indicate the superannuation market is “in good health and well positioned for 2021” despite the emergence of new COVID-19 variants and rolling lockdowns that have hit most Australian states in recent weeks and months.
Overall, SuperRatings growth index has revealed median index funds have delivered a 10.8 per cent return in the financial year to date, off the back of parabolic shifts in the market in 2020.
In good news for older Australians, SuperRatings has found that pension returns have also proven stable amid market swings.
They estimated that the pension growth index has delivered an 11.9 per cent return for the financial year. However, again, this is cut to only a 2 per cent growth for the year, after the massive market movements last March.
“One thing that was reinforced in 2020 is that Australia’s superannuation system is built to withstand market storms and even pandemics,” Mr Rappell said.
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