Super fund members drifting from balanced option

16 February 2018

Australian superannuation fund members are gradually moving away from the typical balanced option funds, according to new research from SuperRatings.

The latest research from SuperRatings confirming that superannuation balances remained in positive territory over the last 12 months despite recent volatility has also pointed to a change in approach by fund members and significant reduction in the proportion selected balanced funds.

It said that while balanced funds still represented the most popular option among members in both the accumulation and pension phase, the proportion of investors looking outside of this option had grown over the past decade.

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“SuperRatings data shows that the proportion of investors in the accumulation phase selecting a balanced fund has fallen from 73.7 per cent to 65.2 per cent since 2008,” the analysis said. “For those in the pension phase, the shift has been more dramatic, with the proportion falling from 56.2 per cent to 37.5 per cent.”

The SuperRatings analysis said that given that most Australians were in the accumulation phase, it was interesting to note that the allocation was becoming increasingly split between higher growth and more defensive options.

“The allocation to higher growth options (including local and international shares, property, and high growth options) has risen from 8.4 per cent to 13.6 per cent,” it said. “While the allocation to more defensive options (cash, secure, fixed interest, conservative balanced and capital stable) has risen from 17.9 per cent to 21.1 per cent.”

“The result of this trend means that there may be more divergent outcomes for members depending on market conditions, with more conservatively positioned portfolios outperforming during periods of market stress or high volatility as we have seen recently,” the SuperRatings analysis said.

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