Bonds drag down super funds
Members of major superannuation funds could be forgiven for thinking last year’s bull run passed them by as Australian pooled superannuation funds recorded their lowest returns in three years, according to an Intech Performance Survey covering 1999.
Members of major superannuation funds could be forgiven for thinking last year’s bull run passed them by as Australian pooled superannuation funds recorded their lowest returns in three years, according to an Intech Performance Survey covering 1999.
The average return of the 32 funds included in the survey was 9.7 per cent, down from 11.8 per cent at the same time in 1998.
MLC Growth was the top performing fund, returning 14.7 per cent, while Credit Suisse was the next best performer on 14.1 per cent, the first time it has recorded a second placing in the survey since rolling out six years ago.
At the other end of the scale Salomon Smith Barney funds continued a lacklustre run, with the Salomon Growth fund returning 6.7 per cent and the stable mate Salomon Balance fund returning the lowest result of 5 per cent, the two lowest fig-ures in the survey.
The absence of strong growth has been attributed to a conservative approach by fund mangers to the bull markets with the impression they had peaked says the survey, teamed up with a weighting to low performing sectors.
Intech manager of research products Catrina Walker says there was on average a 10 per cent weighting toward cash but this was also combined with an Australian fixed interest weighting of about 18 per cent and listed property of nearly 6 per cent.
Bond yields rose throughout 1999 while the Warburg Dillon Read Composite Bond index declined by 1.2 per cent. Short dated paper returned nearly 2 per cent but long dated paper saw a drop of about 9 per cent.
The news was not much better for government bonds which also had a two per cent fall. Corporate bonds showed the only real hope with just under a one per cent gain.
AUTHOR
Jason Spits
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