Growth funds back on track

Growth orientated super funds have had a bumpy start to the 2004/05 financial year but ended the September quarter in positive fashion after global shares markets, Australian equities and listed property trusts rallied to offsetting earlier losses.

The median manager in the InTech Growth Funds universe returned 2 per cent over the quarter, after international equity markets fell and the Australian dollar continued to rise as the new financial year kicked-off in July.

Intech senior consultant Andrew Korbel says super funds, fresh from delivering their best financial year since 1997, appeared to be starting 2004/05 more in keeping with the previous 2 years of negative returns and were down almost 2 per cent in the first month and a half.

“By mid August global sharemarkets were down over 5 per cent from the start of July, currency had taken another 3 per cent from unhedged returns and the Aussie market was down nearly 2 per cent,” Korbel says.

However Korbel says in a demonstration of the tendency for the markets to rebound suddenly and sharply, in the four week period from mid-August to mid-September super funds jumped more than 3.5 per cent after global share markets, Australian shares and LPTs all rallied strongly and the Australian dollar dropped below 70 US cents.

“It is only early days, but super funds are on track to deliver returns in line with their investment objectives if the remaining three quarters are a repeat of the first one,” Korbel says.

Meanwhile the top fund manager performances in the InTech growth survey over the quarter came from IOOF/Perennial, Perpetual and Macquarie, with returns of 2.95, 2.69 and 2.61 per cent net of fees respectively.

The median manger returned 2.04 per cent for the quarter and 13.04 per cent for the calendar year ending September.