Alternatives boosting fund resilience
Superannuation funds with strong allocations into alternative assets were able to largely withstand a downturn in October, according to the latest data released by Sydney-based ratings house, SuperRatings.
The SuperRatings data revealed that median fund returns fell by 1.6 per cent in October, bringing financial year-to-date returns to 3.2 per cent.
SuperRatings managing director Jeff Bresnahan said the strong start to the financial year had been temporarily halted during October, with the average super balanced investment option losing 1.6 per cent over the month.
However, he said the interesting thing to emerge in the SuperRatings data was the effect of asset allocation on the results.
Bresnahan said those funds holding high levels of alternative assets appeared to have been practically immune from the downturn of the equity markets.
“Westscheme and MTAA Super, who both have above average exposure to alternative asset classes, recorded significantly better results than many other funds with [their] losses capped at minus 0.7 per cent and minus 0.9 per cent respectively,” he said. “The worst results for the month exceeded minus 3 per cent, which highlighted the effectiveness of alternatives as a buffer against equity markets.”
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