Intech warns on allocation switching

Skandia subsidiary Intech Investments has used its latest analysis of Australian superannuation fund performance to warn investors against changing their superannuation arrangements and switching to a guaranteed cash fund without first obtaining advice.

The warning is contained in the commentary attached to the latest Intech Super Survey results, which notes that volatility in investment markets and poor performance of most asset classes with the exception of bonds and cash had continued to challenge super fund members.

“In October 2008, the Australian Government implemented a guarantee on bank deposits in an attempt to stabilise financial markets and restore the flow of credit to support global economic growth,” the analysis said. “This has created a strong urge for members to switch to guaranteed cash funds. Investors should think carefully and seek advice before switching their allocations.”

The Intech analysis said however that when looked at from a long-term perspective, superannuation remained an attractive investment, with five-year returns remaining “reasonable” with a median growth return of 8 per cent, which represented a solid longer-term outcome.

It said the five-year results and evidence of historical outcomes continued to support the case for a diversified approach to optimise wealth creation over the medium to long term.

According to the Intech analysis, the top five ‘growth’ funds were Schroders with a return of minus 3.04 per cent, MBA with a return of minus 3.12 per cent, Club Plus with a return of minus 3.82 per cent, REST with a return of minus 3.83 per cent and Hostplus with a return of minus 3.84 per cent.

Where ‘moderate’ settings were concerned, the Intech data named the top five funds as being STC with a return of minus 2.56 per cent, REST with a return of minus 2.82 per cent, Optimix with a return of minus 3.01 per cent, Vanguard with a return of minus 3.09 per cent and Sunsuper with a return of minus 3.15 per cent.