Super funds are participating in the global share market rally, with big gains from US and European markets providing a promising start to the 2018-19 financial year, according to the latest numbers from SuperRatings.
The median balanced option grew at an estimated 1.1 per cent in July, while the median growth option delivered 1.3 per cent. The results compare favourably to the average monthly return over the past five years, which is around 0.7 per cent for both balanced and growth options, meaning super funds have entered the new financial year in good shape.
Australian shares continued to build through July, but it has been the significant outperformance of global shares that has provided the kicker to super returns. Super funds with global exposure have been able to take advantage of the strong momentum on the back of the US and European earnings season, which saw the SR50 International Shares Index jump 2.2 per cent in July, compared to a 1.1 per cent rise in the SR50 Australian Shares Index.
Kirby Rappell, SuperRatings chief executive, said: “Super funds have ridden a wave of positive sentiment over the past few months, and this has been reinforced by strong earnings growth, especially in the US and Europe. Despite the imminent threats to the market rally, from trade wars to Brexit to the emerging economic crisis in Turkey, nothing seems to be putting a dent in confidence.”
Locally, share performance has been less impressive, in part due to the financial sector, which took a beating during the Banking Royal Commission. But the great strength of the super system is that it can diversify across different asset classes, including global shares, fixed income and property.
HOSTPLUS was the best performing balanced option for the 2017-18 financial year, returning 12.5 per cent, followed by AustSafe on 11.4 per cent and AustralianSuper on 11.1 per cent. Over 10 years, the results show UniSuper narrowly moving ahead of both CareSuper and Rest in the balanced option rankings, while Equip has moved up into third sport. Each has returned over 7.0 per cent a year over the past 10 years, compared to the median balanced option return of 6.5 per cent.