Diligence urged despite super returns

Australian growth orientated superannuation fund managers delivered the best returns for nine years in 2004, although some managers did better than others, according to Intech Investment Consultants.

The Intech Growth Funds Survey showed that managers who had performed well in the past, continued to perform well in 2004, while the managers found to be the poorest performers in 2003, Colonial First State and Credit Suisse, still ended up at the bottom of the table in 2004.

The top seven performing managers ranked in the survey were Invesco, which had a 2004 return of 22 per cent, Perpetual with 19 per cent, BT with 18.5 per cent, AMP Balanced Growth with 17.8 per cent, IOOF/Perennial with 17.7 per cent; Citigroup Growth with 17.6 per cent and Suncorp with 17 per cent.

The median manager in the survey returned 15.9 per cent for the calendar year 2004, making it the best year since 1995’s 16.5 per cent. However, Intech senior consultant Andrew Korbel warned that such good results weren’t expected to continue.

“Members should not expect years like we have just had to occur very often. In fact, based on our forecasts, we would expect them to occur about as often as negative years - roughly one in every five years.”

Korbel said that 2004 was also unusual because returns for all asset classes exceeded returns for cash.

“But while the themes for success for super funds in 2004 were slightly different to the previous year - when hedging foreign currency exposure and avoiding bond were the big trends - funds that were over-weight in Australian shares throughout the year were again positioned to do very well. This year, a large exposure to listed property also helped, given its 32 per cent return.”

After listed property, the investment environment found by Intech to have the best returns was Australian shares which returned 28 per cent.