October super returns struggle to positive territory

International shares and cash represented the only real drivers for growth in superannuation investment returns during October, according to the latest analysis from SuperRatings.

The ratings house is estimating the median balanced option return just 0.2% to members in October – a result which reflected the uncertainty created by interest rate shifts and the US Presidential election.

The analysis said most asset classes reported negative returns with international shares and cash the only major asset classes likely to deliver positive returns.

“For Balanced and Growth style options their international share exposure proved to be just enough to avoid a negative return for the month, however more defensive options dipped into the red as both fixed interest and property fell,” the analysis said.

“We saw a significant slowdown over October as markets absorbed interest rate announcements and awaited the outcome of presidential elections in the US,” SuperRatings executive director, Kirby Rappell said.

“Funds’ strong diversification strategies served them well over the period month, with losses in some asset classes being offset by gains in others,” he said.

The median growth option grew by an estimated 0.4% in October, while the median capital stable option, with limited exposure to international shares fell by -0.3%.

Rappell commented that funds had now delivered positive returns to members invested in Balanced (60-76) options, where most Australians are invested, for six consecutive months.

“However, with the Reserve Bank of Australia holding interest rates steady, and the re-election of Donald Trump as President, we can see that members should be prepared to see ongoing ups and downs in their balances,” he said.