Equity markets continue resurgence

Markets in August provided growth-oriented superannuation funds with another bumper month of returns, reinforcing the notion that investors should focus on long-term investing for retirement.

According to InTech Research the median growth fund returned 1.6 per cent for the month, taking the median fund’s returns for the financial year to date to 3.9 per cent.

Over the past five months the research firm reports that the median growth fund, with 8.6 per cent in returns, has wiped out losses suffered earlier in the year.

InTech portfolio manager Chris Thompson says the latest figures are reward for the patience of growth superannuation investors who have endured two consecutive financial years of negative returns.

“The last two months have gone a long way to wiping out these negative returns. In fact, five out of 28 funds in the survey now have positive returns over two years and two months,” Thompson says.

Thompson says the rally was proof again that markets can turn quickly and a reminder that investors should stick to their long-term investment strategy and not attempt to time the market.

“Any investor who had become disillusioned with shares in early March and changed their investment strategy would have missed out on about a 28-30 per cent increase in these assets,” he says.

Anticipation of a continued rally was evident as defensive asset classes such as bonds struggled during the month, with both local and international bonds achieving flat returns as equity returns continued to rise.

Australian shares were the strongest major asset class in August - the first time since January 2002 - as a result of some encouraging earnings reports and strong returns from the resources sector, InTech says.

Listed property was down 1.8 per cent for the month, though remained the strongest performing asset class over the past 12 months with a return of 10.9 per cent.