Australian Super Funds Slip 0.4% in September as Share Markets Stumble
Weaker local and global share markets have snapped a run of positive monthly results for Australian superannuation funds, with the median growth fund dipping 0.4% in September, according to research house Chant West.
The result trims the median growth fund’s return for the financial year to date to 0.8%.
September Proves a Tough Month for Investors
Chant West’s Head of Superannuation Investment Research, Mano Mohankumar, said both shares and bonds went backwards in September. Rising bond yields, higher oil prices and stubborn inflation all weighed on markets.
Mr Mohankumar said Australian shares fell 2.4%, while developed-market international shares lost 0.7% in hedged terms. Because yields were climbing, bonds failed to provide much of a buffer. Australian bonds fell 0.9% and international bonds dropped 1.7%.
Even so, the median growth fund’s loss was kept to just 0.4%. He pointed to the Australian dollar as an important diversifier, with the currency sliding from US72 cents to US69 cents over the month. That shift turned the 0.7% hedged loss on developed international shares into a 1.9% gain when unhedged, while emerging-market shares climbed 2.4%.
Super funds typically leave around 70% of their international shares unhedged. Exposure to unlisted assets also helped soften the blow.
How Different Risk Options Performed
Across the risk spectrum, “all growth” funds lost 0.6% for the month. Conservative, balanced, growth and high growth options each fell 0.4%, Chant West said.
Why the Long-Term Picture Still Looks Strong
Mr Mohankumar reminded members that superannuation is built for the long haul.
Since compulsory super began in July 1992, the median growth fund has delivered an average return of 8% per year. With CPI rising by 2.7% annually over the same period, that works out to a real return of 5.3% per year, well above the usual 3.5% objective.
Even over the past 20 years, which include three major market downturns (the GFC from 2007 to 2009, COVID-19 in 2020, and the high inflation and rising interest rates of 2022), super funds have returned 6.7% per year, still ahead of the typical target.
Chant West added that, over the past couple of decades, the median growth fund has beaten its return objective across rolling 10-year periods, with two exceptions between mid-2008 and late 2017. It attributed those shortfalls to the severe impact of the 16-month GFC period, from the end of October 2007 to the end of February 2009, when growth funds lost around 26% on average.
ASX 200 Slides Almost 3.2%
On the local market, the S&P/ASX 200 Index (ASX: XJO) fell almost 3.2% in September to finish at 8,789.3 points. Among the companies that bucked the trend were Codan Ltd (ASX: CDA), Ingenia Communities Group (ASX: INA) and Reliance Worldwide Corporation Ltd (ASX: RWC).
