Even worse than expected: Super funds dived 6.4% in 2007-08

Sharp falls in global equity markets in June has provided a nasty surprise for super fund investors, with new data from SuperRatings revealing the average balanced fund dived 3.9% in June and 6.39% for the financial year just ended.

Sharp falls in global equity markets in June has provided a nasty surprise for super fund investors, with new data from SuperRatings revealing the average balanced fund dived 3.9% in June and 6.39% for the financial year just ended.

It is the worst annual performance since the introduction of compulsory super in 1992, and compares with a gain of 15.7% gain for the average balanced fund in 2006-07.

The managing director of SuperRatings, Jeff Bresnahan, says super funds have a lot of work to do to explain to members why they will be receiving a worse-than-expected super statement in the coming weeks.

“The listed markets are incredibly volatile at the moment, and at the end of May I don’t think anyone would have envisaged June’s performance. In fact at one stage it looked like funds may sneak back into positive territory.”

Only those super fund options that concentrate their investments in cash or fixed interest assets managed to post a gain over 2007-08.

But Bresnahan is also quick to point out that super fund members need to expect negative returns every six years or so, and longer-term returns remain healthy. The three-year return for the average fund was 7.4%, the five-year return was 9.8%, and the 10-year return was 7.57%.

“The interesting number out of all of this is the rolling 10 year average, which is now down to 7.57%, which is not far away from funds’ medium to long term objective of CPI plus 3.5% per annum,” Bresnahan says.

Top 10 super returns for financial year ended 30 June 2008 – balanced funds

Vision SuperSaver – Balanced Growth

 -1.70%

PSSap – Trustee Choice

-2.07%

MTAA Super – Balanced^

-2.14%

AUSCOAL Super – AUSCOAL Balanced

-2.37%

OSF Super – Mix 70

-2.73%

HOSTPLUS – Balanced^

-3.50%

AGEST – Balanced

-3.59%

Buss(Q) – Balanced Growth^

-3.60%

QSuper – Balanced

-3.61%

REST – Core Strategy

-4.03%

^Interim results
Source: SuperRatings

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