Chant West: China jitters drag super funds lower in August

Super funds suffered significant losses in August, with the median growth fund (61 to 80% growth assets) down 2.9% on the back of growing concerns over slowing economic growth in China.  The poor performance in August more than outweighed the gains in July, so the overall return for the first two months of the 2015/16 financial year was negative, at -0.6%.

Key highlights include:

• It’s when we experience a month like August that we see the benefits of diversification in play.  Growth funds certainly feel the effects when listed markets fall sharply, but they do have substantial investments in other in sectors, including alternative and unlisted assets, that help cushion the fall.  So while Australian and hedged international shares both lost more than 6.5%, the typical growth fund member only suffered a loss of 2.9%.
• The trigger for the sharp sell-off in stocks worldwide was increasing concern over the slowing pace of growth in the Chinese economy.
• Industry funds marginally outperformed retail funds in August with a return of -2.8% versus -2.9%.

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Source: Chant West