Superannuation funds are not responding to the coronavirus outbreak with knee-jerk reactions, according to SuperRatings.
The research house’s latest report found the median balanced option returned 1.9% in January thanks to Australian and international shares. Despite a selloff in global shares at the start of February due to the outbreak, funds were placed to manage these types of movements, it said.
SuperRatings noted that previous outbreaks over the last two decades had resulted in short-term equity market corrections within a range of five to 15%.
It said that managing volatility was becoming increasingly necessary for funds.
Over the 12 months to the end of January, the median balanced option returned an estimated 13.8%, while the median growth option return was an estimated 16.2%. Returns over the past seven years were estimated at 8.8% and 9.8% respectively, SuperRatings data found.
SuperRatings executive director, Kirby Rappell, said: “The funds we’ve spoken to are not responding to the current market situation with knee-jerk reactions.
“They’re watching developments closely, but so far market volatility has been in line with similar risk events experienced in recent years. Fund investment strategies are generally well placed to manage these types of movements.”
Also commenting, StateWide Super chief investment officer, Con Michalakis, said: “What we can be sure about is that the economy in China and Australia will be slower due to the restrictions in place in the first quarter of 2020. However, from a long-term perspective, diversification and strategy based on member age and risk tolerance is more important.”