According to research firm SuperRatings, the average "balanced" fund (which is the default option of approximately 80% of Australian super fund members) posted a fall of 1.05% in October, although the rolling 12-month return still sits at 5.85%, and the return since July is a strong 8.24%.
While the dip in October needs to be seen in the context of the remarkable recovery in super fund returns since sharemarkets bottomed in March, SuperRatings boss Jeff Bresnahan says the October result raises an interesting question: is this a sign there's worse to come or just a temporary hiccup?
He describes the returns in the last nine months as "nothing short of amazing" and says the willingness of fund managers to keep a relatively high exposure to Australian and international sharemarkets has meant fund returns have rebounded much faster than many experts predicted.
But he warns super fund members from making any rash decisions based on one month's data and says it is instead important to watch the much steadier rolling five-year returns, which have improved from 3.7% in February to 5.1% in October.
"It is clear that consumers should not react to short-term results. While it is critical to understand what funds' performance is on a relative basis, there will normally be many reasons for short-term performance disparity," he says.
"However, measuring performance over five to seven years provides a much clearer picture of just how funds have performed and should be a key trigger for consumers to consider switching funds."
Bresnahan says most fund members can have little complaint with the way Australia's super fund managers have come through the GFC.
"Overall, Australian super funds have done an excellent job, and to be able to provide members with returns of 5% plus over the past five years is proof of sound investment strategies during various market cycles."
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