Industry funds still outperforming retail funds

Industry funds continued to outperform their retail fund counterparts in January, and recent weeks of market volatility mean this is likely to continue to be the case, according to the latest data from superannuation research and ratings house, Chant West.

The Chant West data pointed to industry funds posting a return of 0.9 per cent in January compared to 0.7 per cent for retail funds and noted that industry funds continued to hold the advantage over the medium to longer-term.

What the Chant West data also showed was that the recent weeks of market volatility had stripped away what looked like a healthy start for superannuation fund returns in 2018.

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It showed that while median growth fund (61 to 80 per cent growth assets) returned 0.8 per cent in January, early February had seen a change in fortunes with sliding share markets leading the median growth fund around 1.1 per cent lower.

Commenting on the data, Chant West senior investment research manager, Mano Mohankumar said that while January had been a solid month, the falls recorded so far in February had not come as a shock because asset managers had been saying for some time that markets were fully valued.

Mohankumar said the February decline should prompt people to check their investment options to ensure they are suitable for them.

“We encourage members to check that the investment option they are in is suitable for them and, if so, to remain patient, think long-term and not get distracted by short-term volatility,” he said.

“Trying to time the market by moving into a more conservative option can be detrimental because not only do you crystallise your losses, but you also risk missing out on the subsequent rebound when markets recover.”

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Industry funds are loaded with alternative assets, commercial property, infrastructure etc. I would be a lot more worried about that rather a 0.2% underperformance for one month. These assets are a great buffer during a share market correction, but what will happen to the value of these investments now that bond rates are climbing from unprecedentedly low levels? Is a 27-year-long tail wind about to slam into reverse? Perhaps Mohankumar from ChantWest might like to comment on that?

Not looking hard enough.

Means nothing as it is not a true comparison. Union funds manipulate the returns behind unlisted assets and loading up balanced portfolios with growth assets. Look into things further before just reporting union fund press releases.

There are many investment options (within super platforms) that have soundly thrashed Union Funds over the past 7 years.

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