Shock in store for super funds

The investment tide has turned and funds will be lucky to report a positive return

- Alex Dunnin

The world’s capital markets have caught up with Australia’s super funds. After riding the waves of the equities and property market bull run, which culminated in 2021, being among the best years for Australian financial consumers on record, the tide has since turned. Savagely.

This financial year is looking like the MySuper index will deliver a return of around zero or maybe slightly positive, unless things turn sharply worse, in which case returns may dip into the red.

The explanation is that the superannuation performance indexes and the asset class indexes that drive them have turned south, in some cases delivering returns now that are 80% down on what was being delivered in June last year.

At the end of April 2022, the Rainmaker MySuper index had delivered just 4% over the previous 12 months. Just one month before, at the end of March, the index was delivering 7.8%. At the end of December 2021 it was delivering 14.2% and at end June 2021 it was 18.8%.

Pushing returns down has been what’s happened to global equities and bonds. At the end of April 2022, the S&P/ASX 200 had delivered a 12-month return of 10.2%. At the end of March it was delivering 15.0%, at the end of December 2021 it was 17.2%, and at the end of June 2021 it was 27.8%.