Many happy returns

Median balanced superannuation fund offering 8.8pc

Double-digit returns are on the cards for super funds this year, with the median balanced option up 8.8 per cent in the nine months to March 31, according to SuperRatings.

Super returns had proven resilient this year, with the performance driven by strong sharemarkets at home and abroad, the research house said, as it revealed the median balanced fund returned 1.9 per cent in March alone.

“We have continued to see fund balances grow, despite ongoing uncertainty over the inflation outlook both here and abroad,” SuperRatings’ Kirby Rappell said.

While the median balanced strategy is edging up toward double digits, growth funds – that is, strategies that have 77-90 per cent of investments in growth assets – have already tipped over this mark, returning 10.5 per cent for the year to date.

Pension returns, meanwhile, were also positive in March, with the median balanced pension option rising 2.2 per cent and the median capital stable option lifting 1.2 per cent over the month.

International markets, particularly the US, have powered ahead this year despite higher inflation and rates, as well as geopolitical uncertainty, with the S&P 500 up 18 per cent, the Dow Jones rising 15 per cent and the Nasdaq gaining 19 per cent between July and March 31. The S&P/ASX300 rose 10 per cent over the same period.

It’s not only this year that international markets have outperformed. A member with $50,000 invested solely in an international shares option at the start of 2020 would have $74,888, assuming no additional contributions or deductions other than investment fees and taxes, according to SuperRatings.

A member investing $50,000 in a balanced option would have $64,406, while a member in cash would have a balance of $53,244.

The returns are even better when taken from the depths of the Covid lows in March 2020 – the median international shares option has returned 69 per cent, or 17 per cent per year, since the low point.

“The Covid pandemic was a major event for financial markets around the world and while balances have recovered, we continue to see greater ups and downs in returns than prior to the pandemic,” Mr Rappell said.

“With a decent chance of strong returns for financial year 2024, most members will be pleased to see their retirement savings growing.”

While Australian shares have rallied, investors have taken a hit in the past few weeks. The ASX 200 index has slumped 1.8 per cent in April.