Australians are bracing for poor returns from their super funds when end-of-financial-year statements hit mailboxes over the coming month.
According to CoreData research, just two in five (41 per cent) of Australians is expecting a positive return.
An online survey of more than 470 super fund members across all sectors, conducted in July, found one in five (21 per cent) respondents are expecting a negative return, while one quarter (26 per cent) expect a neutral return.
While optimistic super fund members could be in for a shock, with the average expected positive return a substantial 7.7 per cent – well above the return they are likely to receive – history suggests investors are unlikely to switch funds, no matter how they perform.
Men have higher expectations than women of their returns for both last financial year and the current financial one.
Some 45 per cent of male respondents are expecting a positive return from their fund for FY11/12, while only 36 per cent of female respondents expect a positive return.
The majority of respondents (57 per cent) say they are unlikely to switch to another super fund if their fund does not meet their return expectations.
Banking on recovery
Looking forward, Australians appear to be banking on a global economic recovery, with a majority (57 per cent) expecting funds to produce a positive return in the current financial year and only 6 per cent expecting funds to record a negative return. The remainder expects a neutral return.
Kristen Turnbull, head of advice, wealth and super at CoreData, said many Australians could be in for a rude shock when they open their statements.
“There appears to be a hefty gap between expectation and reality, and many people could be disappointed when their super statement turns up in the mail,” she said.
“The global economy has wreaked havoc on super fund portfolios, and it is highly unlikely that even the most conservative portfolios will achieve the 7.7-per-cent return that the average member expecting a positive return is anticipating.
“People need to remember that superannuation is a long-term investment that is subject to short-term fluctuations.
“It’s encouraging that the majority of respondents are not likely to switch fund if their return for FY11/12 does not meet their expectations, however this is arguably due to apathy on the part of many Australians when it comes to their super.”
