Superannuation funds are heading for a disappointing FY19, as lessening market momentum and global growth challenges limit recovery from December’s equities slump.
Balanced superannuation options’ returns were largely flat as weaker economic data and fears of further falls in home prices weighed on investors’ minds in March. SuperRatings found that the typical balanced option returned just 0.8 per cent in March, for example, while growth options’ returns stagnated at 0.8 per cent for the month after stronger gains of 3.2 and 3.4 per cent in January and February respectively.
In terms of the final quarter of FY19, a weakening outlook could make it difficult for funds to recover much of this lost ground. The fact that the estimated financial year-to-date return for median balanced options by SuperRatings is 3.2 per cent was telling of this, as this was so far the seventh worse result since the introduction of the super guarantee in 1992.
SuperRatings executive director, Kirby Rappell, warned that falling home prices combined with the weaker share market could impact retirees beyond just their superannuation returns.
“Falling house prices have a negative wealth effect that flows through to consumer spending, but they also throw a spanner in the works for many Australians approaching retirement who may have planned on downsizing and adding the windfall to their nest egg,” he said.