Volatile market conditions continue to take their toll on superannuation funds, with the median Balanced Option down 2.1% in January. This is the fourth negative month for the financial year so far, taking the financial year-to-date return into negative territory at -0.8%. The financial year-to-date result sits well below the financial year-to-date returns of 6.9% seen in January last year and 8.2% in January 2014. With further volatility also experienced in February, concerns exist as to whether markets will bounce back sufficiently to achieve a positive result by the end of the financial year.
“Unstable markets are making the 2015/16 financial year a challenging one for superannuation funds, with the financial year-to-date return sitting in negative territory with five months left in the year” SuperRatings founder Jeff Bresnahan said. Mr Bresnahan further commented, “Australians have enjoyed solid growth on their super balances in recent years with the median Balanced Option returning 7.5% per annum over the last 5 years. With concerns around global economic growth remaining and market volatility persisting, super funds are likely to face lower return environments in the near future.”
Australian markets experienced steep declines in January, with the ASX 200 Accumulation Index down 5.5% for the month. Materials and resources stocks continued their losses, while the Financials sector also fell sharply on the back of speculation surrounding bank profits in the coming months. Ongoing concerns about global growth prospects and sliding oil prices added to global market volatility, with the MSCI World Ex-Australia Net TR Index down 5.9% for the month. Once again, a falling Australian Dollar helped cushion some of these losses, although returns on international shares were negative with the median international shares option down 3.8% for the month.
Negative market conditions also saw losses across more conservative option types, with the median Capital Stable Option, which has between 20% and 40% invested in growth assets, down 0.5% for the month.”
