Super funds on course for double-digit returns
Super funds are set to provide strong double-digit returns for 2012/13 - and the weakening of the Australian dollar is part of the reason, according to Chant West.
Chant West director Warren Chant said growth funds typically had about 25-30 per cent of their money invested in international shares, and the majority of the currency exposure is left unhedged.
“So when the Australian dollar falls, as it has recently, the value of those shares increases in Australian dollar terms,” Chant said. “We saw an extreme example of that in May.”
International shares were up 1.7 per cent in hedged terms, but the fall in the dollar from US$1.04 to US$0.96 drove that up to 8.8 per cent in unhedged terms.
According to Chant West, this positive contribution from global shares provided a buffer against falls in other growth assets, such as Australian shares - which retreated 4.5 per cent - and listed property.
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