Kirby Rappell
Superannuation returns struggled to recover from the September downturn in October, with superannuation research house SuperRatings estimating that the median balanced option return was flat over the month. This left estimated financial year-to-date earnings at a subdued 0.7% for the first four months of the year.
“Stronger-than-expected inflation data both at home and abroad, US midterm elections and a slowdown in AI stocks dampened returns over the month,” commented Kirby Rappell, Director of SuperRatings. “With the potential for greater uncertainty and volatility, the benefits of diversification may start to re-emerge following a period where global equities have really driven returns.”
The median growth option fell by an estimated -0.5% in October, while the median capital stable option grew by 0.5%.
Pension returns were also subdued over the month, with the median balanced pension option falling by an estimated -0.1%. The median capital stable pension option is estimated to grow 0.6% over the month while the median growth pension option is estimated to fall by 0.4% for the same period.
“The outlook for the remainder of the year remains challenging, with persistent inflation leading to a fifth interest rate rise for Australia this year, and the potential for shifts in global events following the US midterm elections resulting in high levels of ongoing uncertainty,” continued Mr Rappell. “While returns for the financial year so far have been subdued, they remain positive. After particularly strong returns in recent years, members should temper expectations of another year of high single- or double-digit returns and keep their focus on the strong long-term outcomes that funds have delivered. If you are considering making a change to your superannuation settings, it can help to consult your fund or a trusted professional financial adviser before making a decision.”
