Best return for super funds in two years as markets recover

SUPER funds have posted their strongest three-monthly returns in more than two years, almost pegging back the losses suffered following the global financial crisis.

SUPER funds have posted their strongest three-monthly returns in more than two years, almost pegging back the losses suffered following the global financial crisis.

The median balanced superannuation fund was up 1.5 per cent in March and delivered a 5.7 per cent return for the three months to March 31, according to research firm SuperRatings. The result took the median balanced super fund account to $164,464, close to its October 2007, pre-global financial crisis peak of $166,860.

It was the first positive quarter since early 2011 and the best quarterly result since September 2009.

All balanced funds tracked by SuperRatings posted positive returns for the quarter, with the strongest performer, UniSuper, returning 7.1 per cent and the worst, which SuperRatings declined to name, 2 per cent. The median balanced fund is up 1.98 per cent for the financial year so far.

Most Australians in major super funds are in so-called balanced options, which typically have about 55 per cent of their assets in Australian and international shares.

The March quarter results reflect steady sharemarket gains over the first three months of the year, after markets plunged in December spurred by fears over the European debt crisis. The ASX 200 Accumulation Index, which includes the reinvestment of dividends, returned 8.4 per cent in the three months to March.

"Equities were the most significant driver of fund returns during the quarter, with investor confidence bolstered by positive US economic and corporate earnings data, as well as some glimmers of economic hope emanating from some European countries such as Germany," SuperRatings said.

The market recovery also boosted the performance of retail master trusts over that of industry funds. They outperformed industry funds by 6.8 per cent to 5.7 per cent over the quarter, research house Chant West found, due to their higher weighting in listed shares and property.

Retail master trusts are now ahead for three-year returns, with a return of 10.3 per cent compared to 8.9 per cent for industry funds.

Chant West found the median "growth" fund recorded a 6.1 per cent return for the quarter andwas now up 2.3 per cent for the year.