Super returns turned negative in February

Mike Taylor

Managing Editor/Publisher, Financial Newswire

13 March 2023

Superannuation returns turned negative again last month, according to the latest analysis from specialist research and ratings house, SuperRatings.

The analysis estimated that the median balanced investment option generated a return of minus 0.4% in February.

In doing so, SuperRatings cautioned that superannuation fund members should expect markets to remain volatile generating further ups and downs over coming months.

It said, despite this, there had still be a modest positive return over the past 12 months.

“While super funds are estimated to have had negative returns over February, super fund returns remain much less volatile than equity markets. This demonstrates the benefits of diversification and the ability of funds to weather these markets conditions with competitive outcomes for their members.”, SuperRatings executive director, Kirby Rappell said.

He said that while the response to inflation had been swift, there was a silver lining for those members close to retirement who may have greater reliance on cash returns.

“Rising interest rates are now flowing back through to member’s cash returns with the SR50 Cash index return rising since May 2022 in line with the RBA cash rate.”

“Cash returns for the month of May 2022 were less than 0.1%, with members seeing an annual return on cash of just 0.2% for the 2022 financial year. This was less than the cash return for January 2023 meaning members would have earned more on their superannuation invested in cash over the month of January than they did for the entire year to June 2022. If we see the current level of cash returns remain, we expect to see outcomes rising quickly towards 4-5%.”

““For those members seeking more stability or cash flow to support pension withdrawals, rising cash returns will be a welcome trend; however, cash returns remain materially below the current level of inflation and are unlikely to be of benefit for younger members. We recommend members seek advice from their fund or a trusted adviser before making changes to their investment strategy.” Rappell added.