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Super ‘not immune’ to geopolitical tremors

Geopolitical tremors

Underwhelming returns in May are a reflection of superannuation’s susceptibility to geopolitical “chaos”, a research house has said.

The median balanced option return was 0.5 per cent in May, SuperRatings numbers reveal. This lacklustre figure is the result of “global uncertainty”, the superannuation consultant said.

“May was a challenging month for super, with global factors playing a significant role,” said SuperRatings CEO Kirby Rappell.

“The ongoing tariff saga between the US and China, along with talks between President Trump and North Korean leader Kim Jong-un seemed to wrong-foot markets in May, and super funds were not immune from the uncertainty.”

However, May’s soft returns contributed to a “respectable” 8.4 per cent financial year-to-date return, and as such a repeat of the 2017-18 double-digit returns is possible.

Mr Rappell continued, “Despite May’s disappointing performance, super members should expect a very solid innings from super come 30 June.

“We need to see an average return of around 1.5 per cent in June for balanced funds to record a double-digit gain for the financial year, which is entirely possible.”

Growth option funds made the same returns in May as balanced option funds, however investors fully exposed to Australian shares saw returns of 1.1 per cent. At the same time, members in funds with heavy exposure to global shares saw median returns of only 0.4 per cent.

Super ‘not immune’ to geopolitical tremors
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