SuperRatings: Super funds benefit from ‘Trump effect’

After a brief shock to the system, equity markets have rallied strongly on the back of Donald Trump’s upset win in the US presidential election, with Australia’s superannuation investors among the immediate beneficiaries.  However, SuperRatings warned investors to prepare for a potentially rocky ride as markets continue to adjust to the changing political landscape.

According to SuperRatings’ analysis, the median balanced option returned 1.2% in November, reversing the impact of a sustained market slide heading into the election. Investors have turned their attention to the impact Trump’s proposed policies will have on the US and global economy, while the bond market is signalling higher anticipated inflation and higher levels of government debt and spending.

“The turnaround in equity markets has been remarkable, and has resulted in a significant boost to superannuation fund balances in November,” said SuperRatings Chairman Jeff Bresnahan. “The median balanced option has returned an estimated 3.3% in the five-months since June and 5.0% over 12 months, underlining the strength of superannuation despite a tumultuous 2016.”

“While we have not seen a repeat of the large falls experienced at the start of 2016, the past 12 months have been volatile for superannuation returns,” said Mr Bresnahan. “There has been a high degree of global uncertainty, whether due to Brexit or the US presidential election, and while economic fundamentals appear relatively robust, there is still some persistent weakness, which was exemplified by the September quarter’s negative GDP growth figure.

Median superannuation fund Balanced Option returns as at 30 November 2016 are as follows:

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Source: SuperRatings