Super funds pull through April strongly

Superannuation funds managed to deliver solid returns in April despite the softening economic outlook, with the slight market momentum experienced in early May also helping boost performance.

The latest data from SuperRatings showed the typical balanced option returning 1.7 per cent for April, largely driven by gains in both Australian and international share markets, bringing the financial year-to-date return to 5.3 per cent. The December market crash was still being felt in this lower than usual figure.

Members in growth options unsurprisingly enjoyed even stronger returns of 2.1 per cent in April, with the typical Australian shares growth option growing by 2.3 per cent and its international counterpart rising 3.8 per cent for the period.

This meant that, despite yesterday’s market correction, super funds were still on track to beat expectations for the historically weak June quarter. It remained to be seen however, whether funds can finish FY2019 in general strongly.

“There are some dark clouds on the horizon that could dash hope of a strong finish,” SuperRatings said. “Downside risks to the Australian economy, including weak inflation, falling home prices, and tighter credit conditions are taking their toll on consumer confidence, while the return of geopolitical risks in the form of US-China trade negotiations will also contribute to near-term uncertainty.”

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While markets had been risk-on so far this year, the ratings house warned that there could be volatility ahead, as well as fears that markets had come too far too quickly.