Experts warn of super downturn

SUPER fund members are due for a downturn after their sixth straight year of positive investment returns.

Research group SuperRatings says the median balanced super fund option — where most Australians hold their life savings — has climbed 11 per cent in 2017, the strongest growth in four years.

Rising share markets globally have underpinned the performance but a growing chorus of forecasters say a correction is on the cards as some companies appear overvalued.

Nobody knows whether it will be in 2018 or later.

Super fund specialists say the best way to handle a fall is to stick with your existing strategy and ride it out, rather than try to time unpredictable financial markets.

SuperRatings chairman Jeff Bresnahan said many forecasters had expected super fund returns to rise less than 5 per cent this year “but it’s really smashed that out of the park”.

Mr Bresnahan said stronger share prices in Australia and overseas had helped, along with good growth for alternative investments such as infra- structure and private equity.

“Most people don’t realise that about 10 per cent of their super fund is in private equity, venture capital and infrastructure,” he said. “The expectation is that there’s going to be some sort of correction.

“The impossible question is when. Quite often these markets keep forging ahead at the time everybody thinks they’re going to crash.”

Investment experts say people should expect a negative return from balanced super funds every five to seven years, but there were no guarantees.