A positive twist

A recovery in superannuation account balances appears to be at hand. Super funds have produced their best quarterly return since the September quarter 2009 with the median-performing balanced option returning 5.72 per cent.

The main reason for the improvement is the good performance on sharemarkets since the start of this year.

Australian shares, including dividends, were 8.4 per cent higher over the quarter and global shares were 12.3 per cent higher, according to SuperRatings.

Performance data from rival researcher Chant West - which measures performance slightly differently - is close to that of SuperRatings. A director of Chant West, Warren Chant, says: "Sharemarkets have jumped out of the blocks in 2012 and that is mainly because of the flow of positive economic data coming out of the US. Confidence is building ... as the recovery there gains momentum."

The performance puts the typical balanced option within sight of recovering the money lost between October 2007, when balances peaked, and February 2009, when they hit bottom.

Balanced options only need about another 2.5 per cent growth to get back to their pre-GFC peak, Chant says. "Once we pass that level, I think people will start to believe that the GFC era is over."

Balanced options returned only 1.17 per cent for the year to March 31. Over five years to the same date they produced an average annual return of 0.75 per cent and 5.23 per cent over 10 years. "The GFC effect is still there in the longer-term data but it's gradually working its way through and the averages over five, seven and 10 years should start to look more normal," Chant says.

SuperRatings' data shows diversified fixed interest is the best-performing category over almost all time periods.

That reflects the fact that investors have been seeking relatively safe investments such as fixed interest during the market turbulence of the past several years.

Over the year to March 31 this year, the category returned 8.2 per cent. Over 10 years, diversified fixed interest produced an average annual return of 6.4 per cent. The Australian shares category is the best performer over the past 10 years with an average annual return of 6.8 per cent but fund members have experienced a rocky ride to achieve that return. Over past year, Australian shares returned minus 4.8 per cent.