Global jitters shake Aussie super funds

THE gains superannuation funds chalked up early in the financial year have been wiped out by the market rout this month, says new research.

Research house Chant West says the median growth fund, the type of fund most Australian workers hold, rose 1.4 per cent last month.

But those gains have since been eroded as global sharemarkets retreated and the Australian bourse pulled back from a record high.

Chant West senior investment research manager Mano Mohankumar said the slide in returns was no cause for panic.

But after a strong run over the past decade, fund members needed to lower expectations.

“Super fund members need to remember they have had an exceptionally strong run over the past 10 years, with returns consistently beating inflation with growth of 8 per cent,” Mr Mohankumar said. “You can’t expect those returns going forward, as most asset classes are close to full value.”

US-China trade tension, Brexit and slowing economic growth were issues, he said.

Australia’s benchmark share index, the ASX 200, tumbled 2.9 per cent on Thursday in its biggest single-session selldown since early last year.

That hit followed falls of 1.9 per cent and 2.4 per cent on consecutive days last week, albeit after the index hit an alltime high late last month.

By Chant West’s analysis, Australian shares and hedged international shares are trading 5.5 per cent and 4.7 per cent lower respectively this month.

But it estimates the median growth fund is down only 2.2 per cent, highlighting the value of diversifying investments.

Median funds, under Chant West’s definition, are those with 61 per cent to 80 per cent of their cash in “growth” assets such as shares.

Mr Mohankumar cautioned against shifting funds in an effort “to time the market”, saying that moving to a conservative portfolio merely “locks in the losses” and super was a “long-term game”.

“Members should not be distracted by noise,” he said.