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SUPERANNUATION funds have lost ground slightly in December but the most common super accounts should end 2014 up by between five and eight per cent, according to consultants Chant West.
The median growth fund, which is typical of the big majority of pooled funds, notched up a total return of 7.1 per cent in the first 11 months of the year, according to principal Warren Chant.
“While the first half of December was negative, the median return still stands at an estimated 6 per cent,†he said.
Super funds posted returns of 12.8 per cent in 2012, and 17.2 per cent in 2013.
“Super funds look set to deliver a more modest result in 2014,†Mr Chant said.
He said an eventual return for the 2014 of between 5 and 8 per cent “would be broadly in line with the typical growth fund objective of about 3 to 4 per cent per annum above inflation,’’ or about 6 to 7 per cent overall.
“If that happens it should be seen as a solid result,†Mr Chant said.
“It would mean that members’ savings will have grown at about double the rate of increase in the cost of living and well ahead of the growth in wages.â€
But the modest result would be an aberration in comparison to recent returns. In the past decade, six annual returns have recorded double digits, along with two years of negative growth, including the 21.5 per cent plunge in 2008 at the height of the global financial crisis.
Chant West’s benchmark median growth fund contains between 61 and 80 per cent growth assets, being domestic and international shares, and property assets.
The depreciation of the Australian dollar favoured offshore sharemarkets again.
In November, the local market index was down 3.2 per cent but international shares held by Australian investors were up by 3.1 per cent in hedged terms and 5.3 per cent in unhedged terms, thanks to a drop in our currency from US88c to US85c.
The two major categories of pooled super funds — retail funds and industry funds — were line ball in returning around 0.8 per cent in November, he said, although industry funds are still well ahead in the long term, outperforming retail funds over a 15-year timescale by an average of 1.1 per cent a year, returning an annualised 6.9 per cent against 5.8 per cent for the retail funds.
Additional reporting: Business Spectator