Institutionally managed superannuation funds are on track for impressive double digit returns over the 2016-17 financial year, with data released this week showing a cumulative return to the end of April above 10 per cent.
Superannuation research group Chant West found that managed super funds were again in positive territory in April, with the median growth fund (61 to 80 per cent growth assets) up 1.5 per cent. This was the eighth month of positive performance out of the past 10, and the cumulative return for the financial year to date now stands at 10.1 per cent.
Chant West’s data found that all major asset sectors delivered positive returns in April, led by listed shares and property. Australian shares were up 1 per cent, while international shares advanced 1.1 per cent in hedged terms.
Yet, the slide in the Australian dollar over April (down from US$0.76 to US$0.75), meant the return in unhedged terms was boosted to 3.6 per cent. Listed property also delivered strong returns, with Australian and global REITs up 2.6 per cent and 1.2 per cent, respectively.
“Growth funds have performed better than expected over the first 10 months of the 2017 financial year,” said Chant West director, Warren Chant.
“With the cumulative return sitting at 10.1 per cent, it is almost certain that they’ll finish the year in the black for the eighth consecutive time – and quite possibly in the double digits. This is particularly impressive given that we’re still in a period of considerable uncertainty, both economic and political. It seems investors are looking through the uncertainty and focusing on the economic and market outlook, which is certainly looking better than it did 12 months ago.”
Chant said that while US share markets were higher in April, the initial growth estimate of 0.7 per cent annualised for the March quarter was disappointing.
Improving economic data across Europe provided support to markets while, in the Asia Pacific, China’s economy continued to show signs of improvement.
“Back in Australia, the RBA kept interest rates on hold at 1.5 per cent earlier this month, citing the improvement in the global economy,” Chant said.
“The federal Budget was also handed down and, despite some contentious measures including an unprecedented levy on five major banks, has generally been well received.”