Retirement
Superannuation continues strong growth in 2020
Following a stellar 2019 where median growth superannuation funds returned members 14.7 per cent, funds have kicked off the new year in impressive style, growing by 1.9 per cent in January, new research finds.
Superannuation continues strong growth in 2020
Following a stellar 2019 where median growth superannuation funds returned members 14.7 per cent, funds have kicked off the new year in impressive style, growing by 1.9 per cent in January, new research finds.
According to results from research institution Chant West, growth in Australian shares, local and overseas bonds and the depreciation of the Australian dollar helped grow members' money.
Chant West senior investment research manager Mano Mohankumar said, “The year has started positively despite some lingering uncertainties. The biggest unknown is the potential spread of the coronavirus and what that might mean in economic terms.”
The strong momentum is tipped to continue in February with the researchers forecasting a 1.5 per cent growth in funds so far in February.
Mr Mohankumar predicted fears from the coronavirus could subside in February, helping to guide growth for members.
“Global investors seem to have regained their confidence in February, with both Australian and global share markets recording gains so far,” Mr Mohankumar said.
The superannuation researchers also highlighted the strength of lifestyle products in 2020.
“We have mostly seen strong performance from growth assets in recent years so, as we would expect, the options that have higher allocations to growth assets have generally done best,” Mr Mohankumar said.
“Younger members of retail life cycle products – those born in the 1970s, 1980s and 1990s – have outperformed the MySuper Growth median over most periods shown. However, they have done so by taking on more share market risk.”
“The older age cohorts (those born in the 1960s or earlier) are relatively less exposed to growth-orientated assets. Capital preservation is more important at those ages so, while they miss out on the full benefit in rising markets, older members in retail life cycle options should be better protected in the event of a market downturn.”
Overall, the results for superannuation remain on track for members, the Chant West research showed.
“The healthy returns since the end of the GFC in early 2009 have seen the longer-term performance tracking well above that CPI plus 3.5 per cent target for the past six years,” Mr Mohankumar concluded.
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