Strong dollar hurts super returns
The median superannuation growth fund returned just 0.2 per cent in April with further appreciation of the Australian dollar reducing the unhedged returns of international shares, according to Chant West.
It brought the cumulative return for the financial year to date to 10.2 per cent, meaning a likely second straight year of positive returns for fund members, said Chant West director, Warren Chant (pictured).
Returns would have been stronger if not for the inflated Australian dollar, which appreciated against all major currencies over the financial year to date, including a 30 per cent rise against the US dollar, he said.
“Unless you hedged against that currency movement, it took a big chunk out of the value of your overseas investment returns,” Chant said.
“We estimate that currency detracted about 3.5 per cent from the typical growth fund return over the financial year to date, with the better-performing funds being those that hedged more against the rising Australian dollar,” he said.
International shares returned 2.5 per cent in hedged terms in April but recorded a loss of 1.4 per cent in unhedged terms, and the Australian share market was down 0.3 per cent for the month. Australian and global real estate investment trusts grew by 0.3 per cent and 4.4 per cent respectively, Chant West stated.
Industry funds just edged out master trusts, returning 0.2 per cent against 0.1 per cent for the month, Chant West stated.
AUTHOR
Chris Kennedy
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