Median growth super fund delivers 9% over four months

The median superannuation growth fund returned what research and ratings house Chant West is describing as a “staggering” 9% over the past four months.

Chant West confirmed yesterday that the median growth fund (61% to 80% growth assets) had delivered 1.9% in February contributing to the 9% over four months and a 6.7% for the financial year to date.

The February result was underpinned by international share markets, fuelled in large part by healthy corporate earnings, according to Chant West Senior Investment Research Manager, Mano Mohankumar.

“Economic data released during February again showed continued resilience in the US economy, which weakens the case for interest rate cuts in the near term,” he said. “Over the month, developed market international shares surged 5.9% and 4.7% in hedged and unhedged terms, respectively. Emerging markets shares were up even more, returning 6.3%, boosted by the share market rebound in China.”

“Australian shares were also up but by a more modest 1%. As expectations of interest rate cuts in the near term faded, bond yields rose over the month which resulted in bond markets slipping slightly, with international and Australian bonds down 0.8% and 0.3%, respectively.

“As a result of the strong share market rally in recent months, there’s a little nervousness around share market valuations. It’s a good time to remind fund members that super is a long-term game and that most Australians have their super invested in well-diversified portfolios,” Mohankumar said.

“While listed shares, with a 55% weighting on average, remain the primary driver of growth fund performance, there’s a meaningful 45% allocated to a wide range of other asset classes. That diversification provides a smoother return journey during periods of share market volatility. At the same time, growth funds are able to capture a significant proportion of the upside when share markets perform strongly as we’ve seen in recent months.”