Financial year super returns headed over 8%

Mike Taylor

Managing Editor/Publisher, Financial Newswire

10 May 2023

Superannuation fund returns remained in positive territory in April, according to the latest analysis from SuperRatings, which is pointing to a financial year return of around 8%.

The median balanced investment option delivered a return of 1.2% for the month driven by continued momentum in Australian and global equities, according to the ratings house.

However, the SuperRatings analysis noted that inflation continued to sit well above central bank targets and that the Reserve Bank of Australia defied expectations by increasing rates by another 25 basis points, “again highlighting the ongoing challenge posed by inflation”.

“As we head towards the end of the financial year, funds look to be on track to deliver strong absolute returns with an estimated 8.1% return for a Balanced (60-76) option over the financial year to date,” the analysis said.

“The median growth option rose by an estimated 1.4% over April, while the median capital stable option rose by an estimated 0.7%.”

Commenting on the data, SuperRatings executive director, Kirby Rappell said the strong financial year to date return would be welcome news for members after last year’s losses as well as some bumpy months at the beginning of the financial year.

“However, these returns and latest inflation figures demonstrate the challenge facing super funds, the economy and everyday Australians. Inflation for the year to March sat at 7%. Most funds over the longer term are targeting a return of inflation plus 3% per annum for their members invested in the balanced option,” he said.

“Put simply, super funds are on track to return around 8% thus far this financial year, despite this also being behind an objective of inflation plus 3%. What it reinforces is that super remains a long-term game and that returns are holding up pretty well, despite the challenges that funds and their members are facing to adapt to a higher inflation environment.”

“We expect to see continuing volatility in returns, despite the strength with which volatility has been navigated to date. Setting long term strategy remains the best approach to long term success. While fund performance may struggle to significantly outpace inflation in the current environment, over the long term they continue to perform well.”