Super Funds on the increase

After the worst slump in 25 years superannuation is finally projecting positive growth by as much as 9% in the three months to June.

The Australian has reported that balanced funds, forming more than half the industry, were up 4% in the quarter, while gains ran as high as 7% for high growth funds and 9% for all-growth funds with big loadings in Australian and International shares.

Consultant Warren Chant stated yesterday that after a year of eight down months and four rising months has finally led to a median gain in balanced funds of 5.5 per cent in the June quarter.

It is finally produced some positive results after two bad negative years.

Two bad years for Super Funds

Superannuation returns have started to produce some favourable results but funds have much further to go before reaching positive territory.

A median balanced fund showed a -8.4% return in the financial year to June, and a median growth fund returned -13%. The latter comes after a -7% year for the sector the previous year.

The numbers get worse as the share of growth assets rise, so that high-growth funds with more than 80 per cent in growth assets such as shares and property were -16.3%. All growth asset funds reported an 18.2% loss.

It is unfortunate that we had to have two such bad years in a row; we don't think it can get much worse in fact we are anticipating a full year return this year in the low single figures.

Agency SuperRatings stated yesterday the volatility of the past year was making it difficult for many Super Funds to finalise their figures. Chief executive Jeff Bresnahan said he expected the differences between the best and the worst to be more than usual.