Growth-options within superannuation funds – those with a 70/30 split between growth and conservative investments – are experiencing one of their most volatile periods of the past two decades, the latestInTechGrowth Funds Survey has revealed.
Growth managers delivered a strong result for March, with median growth funds returning 1.6 per cent, and making it the seventh successive month of either positive or negative returns of 1 per cent or greater.
This solid March result was driven by good returns from Australian shares (up 4 per cent) and listed property (up 4.4 per cent). However international shares (hedged) were down 0.6 per cent, and bonds down 0.4 per cent.
Reversing the “all negative” trend of the previous two months, all managers delivered a positive return for March, withMaple Brown AbbottandTyndalldelivering the best returns of 2.1 per cent. Other top performers for the month wereAM CorpandAusbilwhich both had a 2.0 per cent return.
However despite the strong returns, the news remains gloomy for 2002/03 financial returns to date, with the median manager returning negative 6.1 per cent for the nine months to date.
InTech senior consultant Andrew Korbel says, “With all managers in negative territory, the financial year is shaping up as another negative one. In fact, without an improvement in returns in the remaining three months, this year will be worse for most funds than last year’s negative 4.1 per cent median result”.
And while noting that the recent volatility in returns has created opportunity for stockpickers to add value, the managers in the InTech growth universe have on aggregate lost value from tactical asset allocation (TAA), with the median value added from TAA for the six months ending February 28 a negative 0.52 per cent.
Korbel says, “Four managers have been able to add over 0.5 per cent over the last six months. However the latest results continue to bear out InTech’s view that actively deviating from the fund’s strategic asset allocation via tactical timing shifts is like playing with matches, and not an activity likely to generate positive enhancements to returns in the long run”.
