Inflation generates super returns see-saw

Mike Taylor

Managing Editor/Publisher, Financial Newswire

13 September 2022

Superannuation fund returns again hit negative territory in August, with the median balanced option delivering minus 0.5%, according to the latest data from superannuation research and ratings house, SuperRatings.

The dip back into negative territory came after a positive start to the new financial year in July with SuperRatings attributing the situation to losses across developed markets following as interest rates rose in response to inflationary pressures.

It said the median growth option fell be an estimated 0.4% while the median capital stable option delivered negative 0.5%.

Commenting on the negative August data, SuperRatings executive director, Kirby Rappell said it represented a slight pullback from the strong recovery in returns recorded in July.

“While it is a small negative result this month, this reflects the volatility across investment markets, with elevated inflation levels continuing to pose challenges across markets,” he said.

“Another interest rate rise impacted investment returns, though the silver lining here is that this may benefit retirees who are deriving an income from their pension accounts through exposure to cash.”

Rappell said that setting a long-term strategy remained crucial, with this month’s result demonstrating see-sawing between positive and negative returns over the short term, with multiple factors impacting the global economy and investment markets.

He said super funds typically had processes in place to navigate these uncertain times, so setting a strategy which meets your needs and then remaining focused on the long term remains our key message.