While markets may have appeared remarkably calm ahead of the US election storm, a gradual sell-off in shares through October led to losses for superannuation investors. According to SuperRatings, the median balanced option return for October is likely to be an estimated -1.0%, with shares and bonds both contributing to falls in portfolios.

“Volatility was surprisingly low ahead of the US presidential election, which became the geopolitical event to watch after Brexit,” said SuperRatings CEO, Adam Gee. “But what we saw in October was a string of small losses, which culminated in the market’s shock reaction to the election result last week, and this has led to losses for fund members.”

“Along with equities, we also saw some selling in fixed income markets in anticipation of the Fed resuming its tightening, either in December or early 2017,” said Mr Gee.  “It’s been a long time between drinks, and after the US election result it may be longer still. A Trump win was unexpected, and there may be more for markets to adjust to, but if economic data continues to be positive, there will be mounting pressure on the Fed to act regardless of who occupies the White House.”

Median superannuation fund Balanced Option returns as at 31 October 2016 are estimated to be as follows:

Superannuation Fund Accumulation Returns
Month of October 2016 61.0%
3-month return to 31 October 2016 60.7%
Rolling 1 year return to 31 October 2016 53.4%
Rolling 3 year return to 31 October 2016 56.3% p.a.
Rolling 5 year return to 31 October 2016 58.6% p.a.
Rolling 7 year return to 31 October 2016 57.2% p.a.
Rolling 10 year return to 31 October 2016 54.8% p.a.

 

“The calendar year has been challenging for super investors with global uncertainty higher than that seen for many years, given the US election and Brexit results over the year.” said Mr Gee. “While 10-year returns are not quite hitting their CPI + 3.5% target, medium term returns continue to sit well above these targets, reflecting the strong performance of funds generally.”

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Source: SuperRatings

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