super funds reverse losses

Super funds reverse losses with 12pc return expected this year

Sara Rich From: The Australian December 22, 2009 12:00AM

SUPER funds have made a stunning recovery this year and are likely to post annual returns of 12 per cent compared with losses of 20 per cent last year.

The average Australian's superannuation is now worth almost $78,000, compared with $70,000 at the start of the year, after funds posted another positive return last month.

Data released yesterday by independent research house SuperRatings showed that most default funds -- where four in five Australians have their super -- gained 1.3 per cent last month after slumping more than 1 per cent the previous month when shares and listed property declined in value.

SuperRatings estimates that the median return for balanced options -- the style of asset allocation employed by most default funds -- will be between 10 and 12 per cent this year, which would be one of the best calendar year results in the past decade.


Last year, the median balanced option dived about 20 per cent as the global financial crisis wreaked havoc with sharemarket returns.

The five-year rolling return is currently about 5 per cent a year.

So far this year, the median balanced option has added 11.14 per cent, while the median growth option has piled on 13.44 per cent.

For the average $70,000 superannuation balance, that represents a gain of about $7796 and $9409 respectively. Super fund members who invested $70,000 in an Australian shares option at the beginning of the year would have seen their balance grow to $91,516 by November.

SuperRatings defines growth options as those with a 77-90 per cent allocation to growth assets, such as shares and property, while balanced options have a 60-76 per cent allocation to such assets.

SuperRatings managing director Jeff Bresnahan said: "Australian shares continue to be the standout in terms of returns with a 12-month result of 30.86 per cent against international share returns of just 2.27 per cent over the same period.''

Mr Bresnahan said the median balanced option had a 29.6 per cent exposure to Australian shares and a 22.3 per cent allocation to international shares.

In terms of industry funds versus retail funds, independent researcher Chant West found that median growth retail funds, with their preference for listed markets over unlisted assets, outperformed their industry fund counterparts by 5.8 per cent over the past year.