Retreating dollar helps super returns
The weakening in the Australian dollar may help many Australian superannuation funds end the financial year with double-digit returns, according to ratings and research house Chant West.
Chant West principal Warren Chant said the weakening Australian dollar had served to boost returns from international shares — something which had offset a less-than-stellar performance from domestic equities over recent months.
The median growth fund (61 to 80 per cent allocation to growth assets) was up 0.7 per cent for the month of May, shrugging off a 4.5 per cent fall in the Australian share market and bringing the return for the 11 months of the financial year-to-date to 16.3 per cent.
"Typically, growth funds have about 25 per cent to 30 per cent of their money invested in international shares, and the majority of the currency exposure is left unhedged," he said.
"So when the Australian dollar falls, as it has recently, the value of those shares increases in Australian dollar terms."
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