Super funds back to black
Superannuation fund median balanced options returned positive figures for the first time since the start of 2016, up 1.4 per cent in April, according to SuperRatings data.
With the market extending its recovery despite choppy global conditions, the financial year-to-date return remained at a fragile 1.7 per cent, far from the 9.6 per cent returned to super fund members in 2015, the data said.
Returns over five and seven year periods were 7.7 per cent, and 8.7 per cent respectively.
SuperRatings chairman, Jeff Bresnahan, said April was a solid month but the prospect of a positive financial year return was not certain.
"Following the rocky start to the year, investors are now more upbeat, and we have seen that reflected in the current market recovery. But significant downside risks and a lot of uncertainty in the global economy remain," Besnahan said.
"Outside of share markets, global returns on fixed income are low and zero, and negative interest rate policies are presenting a real challenge for funds seeking to achieve their risk and return targets."
SuperRatings' report said large gains from the materials and energy sectors drove returns, with higher commodity prices supporting valuations.
On the Reserve Bank's decision to cut the cash rate earlier this month, Bresnahan said there were concerns on pension fund returns as many retirees relied on fixed interest and cash to offset their income drawdowns.
"Clearly the RBA is keen to support prices, but undoubtedly it has also seen an opportunity to bring the Australian dollar down further," he said.
"A falling dollar is generally good for super returns, because most super fund portfolios are only partially hedged.
"While low rates are good for borrowers, savers ultimately bear the cost, and persistently low rates will undoubtedly have a negative impact on the longevity of pension accounts."
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