Funds notch up super run

Positive returns reduce losses from COVID-19 crisis

AUSTRALIAN super funds have clawed back nearly all their losses nearly eight months after the COVID-19 crisis sent markets into a tailspin.

Super funds posted a positive return in the September quarter and climbed a further 2.5 per cent in the first half of October, according to research house Chant West. The median growth fund (61 to 80 per cent in growth assets) gained 2 per cent through the quarter despite a slight retreat in September that delivered the first negative monthly result since March, Chant West said.

The quarterly gain, combined with the strong return for the June quarter and the October lift, has seen super fund growth options deliver an 11.5 per cent return, just shy of the double-digit losses suffered at the start of the year.

“Growth funds have now erased most of the 12 per cent loss experienced back in February and March. That’s despite the uncertain global economic and political backdrop,” Chant West senior investment research manager Mano Mohankumar said.

“The global economy is in recession but we don’t know what pattern the downturn and eventual recovery will take. Trade tensions with China keep simmering in the background but, more immediately, all eyes will be on the upcoming US election which is only two weeks away.”

The positive return over the September quarter was driven mainly by international shares, which returned 6.9 per cent in hedged terms, he said.

“However, the appreciation of the Australian dollar (up from US69C to US72C) reduced that gain to 3.8 per cent in unhedged terms,” he said. “Australian shares were flat, with a return of -0.1 per cent over the period. Growth funds returned -0.6 per cent for September, while balanced funds declined 0.4 per cent.

“Share markets wobbled a little in September after rallying strongly for the previous five months. But again we saw the value of diversification come to the fore — just as we did during the market crisis in February and March.”