Jeff Bresnahan
The Australian superannuation industry has bounced back from one of the most turbulent quarters in recent memory, according to a new report by SuperRatings.
The median balanced investment option posted an overall median gain of 2.01 per cent, which was assisted by the surge in the Australian share market over the last six weeks of the quarter.
According to the report, in the last 10 years to September 30, 2007, investors received a compound 9.9 per cent per annum gain on their balanced super portfolios.
Super funds that delivered the highest returns for balanced investment options in the 12 months ending September 30, 2007, included the balanced Catholic Super Fund with a 19.6 per cent gain, MTAA Super with 19.1 per cent and AustralianSuper with 18.2 per cent.
SuperRatings managing director Jeff Bresnahan said asset allocation had proven to be a deciding factor in determining the winners and losers in the super performance stakes, and the industry as a whole continued to provide strong long-term performance not seen since compulsory super was introduced in 1992.
“Clearly, the strength of the Australian share market, coupled with the success of the infrastructure and private equity investments of many funds, has led to this situation,” he said.
“However, for funds to be brought back to their objectives, they would need to experience a sustained period of performance less than their objective, which for a balanced option means mid to low single digit returns. This is looking less likely every year that ticks past.”
Bresnahan said the strong results were much higher than the industry had predicted, which initially told investors to expect a return of around Consumer Price Index plus 3.5 per cent over rolling five year periods. And this showed that “funds cannot predict the future”, which raises concerns about whether future investor expectations can be met.
