Superannuation returns back to GFC gloom

Australian superannuation fund members will be sorely reminded of the worst of the global financial crisis when they view their latest return statement, with new data released by Chant West revealing funds have posted their worst quarter since December, 2008.

Chant West principal, Warren Chant said the median growth fund had fallen another 1.9 per cent in September, contributing to a loss of 5.1 per cent for the quarter, largely on the back of the unresolved debt crisis in Europe, which continued to send jitters through financial markets.

"At the end of the 2010/11 financial year, the typical growth fund required about six per cent to return to its pre-GFC high which was achieved in late October, 2007," Chant said. "Unfortunately, that shortfall has now blown out to 11 per cent."

He said that even if funds were to meet their typical performance objective of about seven per cent a year, it would take between one and two years to make that up.

"The past quarter has brought back dark memories of the GFC," Chant said. "The difference this time, however, is that most companies, in Australia and elsewhere, have strengthened their balance sheets and are in a much healthier position than they were then."

He said that while some fund members might again be feeling the temptation to switch their money into cash and other low-risk options, they needed to remember that superannuation was a long-term game and that unless they were in sight of retirement could do themselves more harm than good.

"That's because a switch out of growth assets means you're crystallising your losses and exposing yourself to the risk of missing out on any potential upswing," Chant said.