Super returns down by 8 per cent

Warren Chant

Superannuation fund investors should brace themselves for investment performances of between —7 per cent and 8 per cent, according to the second monthly multi-manager performance survey issued by Chant West.

The survey analysis said the —7 per cent to 8 per cent returns were largely driven by tumbling share and property markets, but makes the point that there is less certainty with respect to the performance contribution of unlisted investments such as direct property, infrastructure and other alternatives.

It said that these investments are not traded and priced publicly but that, in the current financial environment, it was likely that some writing down of asset values would have occurred.

Commenting on the survey findings, Chant West principal Warren Chant said it was important for superannuation fund members to understand what was happening to their money, especially in circumstances where many were experiencing negative returns for the first time.

“We estimate negative 7.5 per cent for the average growth investment option, which is what most members invest in,” he said. “That is based on the negative return of about 2.5 per cent for the 11 months to May and on our estimate of negative 5 per cent for June.”

Chant said that over the medium to long term superannuation continued to perform well, and that over three years it was estimated that the median return for growth funds was about 7.1 per cent a year, with inflation giving a real return of about 3.7 per cent a year.

“Super’s performance over five years is even better, with a real return of about 6.5 per cent a year as funds benefited from the strong bull run in Australian and overseas shares,” he said.