Trade war gives super funds a mixed FY start

After 10 consecutive positive financial year returns, super funds saw a mixed start to 2019/20 due to the market’s response to the US/China trade war.

July saw the median growth fund (61-80 per cent in growth assets) up 1.4 per cent, but those gains had reversed in the first half of August, with it now in the red for the new financial year.

Mano Mahankumar, Chant West senior investment research manager, said despite a good start for super funds, August trade tensions and fear of a recession had led to a massive sell-off.

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“How fund members react to the negative headlines is important. Older people approaching retirement are naturally more likely to be concerned about seeing their balances go down than people in their 20s or 30s,” Mahankumar said.

“However, they also tend to be more conservatively invested. We estimate that conservative funds (21 to 40 per cent in growth assets) are only down 0.4 per cent over August to date.

“Members should never forget that superannuation is a long-term game and that funds have a great track record of delivering on their long-term risk and return objectives.”

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