Super investors rewarded in 2005

Superannuation investors have enjoyed a second consecutive year of returns in the double-digits, according to the 2005 Mercer Pooled Fund Survey, with the median fund in the study delivering a return of 15.1 per cent per annum.

The strong results were driven mainly by Australian shares as this asset class produced a return of 22.5 per cent for the 12-month period.

While the other asset classes could not match the performance of Australian equites all of them managed to deliver a positive return with overseas shares the second best category with a return of 16.8 per cent, closely followed by listed property with a 12.7 per cent return.

Mercer’s survey found the best performing funds would have employed a higher allocation to growth assets, preferably towards Australian energy and mineral stocks at the expense of cash, as well as an international shares overweighting in Europe and Japan.

According to the survey, the top three performing funds for 2005 were the Russell Growth, Macquarie Growth, and Fiducian Growth funds, with returns of 17.9 per cent, 17.7 per cent, and 17.7 per cent respectively.

Over the past three years the Fiducian Growth, Russell Growth and Invesco Growth funds were the most investor friendly.

The survey assessed the performance of 38 funds across the 2005 year and consisted of nine growth funds, made up of 75 to 85 per cent growth assets, and 29 balanced funds, allocating at least 60 per cent but less than 75 per cent of funds to growth assets.

However, according to the 2006 Mercer Investment Consulting Fearless Forecast survey, the returns generated in 2006 will not match those of 2005.

The 157 investment managers from around the world that participated in the study expect a median return of 7.6 per cent from global equity markets in 2006. This is a fall from the MSCI World IndexSM return of 9.5 per cent for 2005.

Respondents see the Australian market as once again being a strong performer, predicting real GDP growth for the economy of 3.3 per cent as opposed to the global GDP median growth of 3.1 per cent.

Fund managers surveyed also anticipate listed equities, infrastructure investments and hedge funds will be the best performing asset classes in the 2006 domestic market.

Globally, managers predict a small shift in superannuation asset allocation toward alternative assets, generally of less than 5 per cent.