The early estimate is that the median growth fund, a strategy that’s 60 to 89 per cent growth assets, will return 7.1 per cent for 2018-19 financial year.
Chant West’s senior investment research manager, Mano Mohankumar, said that, early in the year, funds were predicted to take a loss.
“The 2018-19 financial year has been a tale of two halves. Over the six months to December, growth funds lost 2.4 per cent, but since then, they’ve surged nearly 10 per cent – largely on the back of strong share markets,” said Mr Mohankumar.
Typically, the long-term objective is to beat inflation by 3.5 per cent, according to Mr Mohankumar.
This year’s result is predicted to be 5.5 per cent above inflation, meaning members received an extra 2 per cent above the goal of the funds, according to Mr Mohankumar.
The top-performing superannuation funds are predicting returns of 10 per cent, which is 8.5 per cent above the current inflation rate.
“Currently, domestic shares are up 11.5 per cent for the year, with international shares are up 5.6 per cent in hedged terms, but with the depreciation of the Australian dollar, have increased to 11.5 per cent unhedged,” said Mr Mohankumar.
Unlisted assets – assets that are not listed on the stock exchange – also delivered respectable returns, although not as high as in some recent years. These assets aren’t valued continuously, so it will be a little while.
The early prediction for unlisted property growth to be between 5 and 8 per cent once the June quarter revaluations are factored, said Mr Mohankumar. Returns from unlisted infrastructure and private equity will likely range between 8 and 11 per cent.
“In the defensive asset sectors, bonds have had an excellent year, with Australian bonds up 9.8 per cent and global bonds gaining 7.1 per cent. With interest rates at an all-time low, it’s not surprising that cash was the worst-performing sector with a return of just 2 per cent,” said Mr Mohankumar.