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Super funds heading towards first annual loss in 7 years

Image: Getty
Image: Getty

Australia’s retirement savers could suffer their first loss since 2011, after November saw another month of negative superannuation returns.

The median superannuation fund’s balanced option fell 0.6 per cent in November, following a decline of 3.1 per cent in October.

And December is likely to produce more of the same, analyst SuperRatings warns.

Why is this happening?

Yesterday’s shocking Dow Jones performance followed months of global market volatility that has hit super funds hard. In fact, the median balanced option is currently sitting on a year-to-date return of just 1.8 per cent.

December’s lackluster performance will likely erode this small amount.

“Heading into 2019, it looks like members will need to get used to some of the volatility we’ve seen in markets over the past two or three months,” said SuperRatings executive director Kirby Rappell.

“This is certainly a challenging environment for super funds at the moment. Share markets are under pressure globally, and recent data indicate that the economy is weaker than expected, with downside risks including a softening housing market having a real impact on confidence.”

Super returns over the years

The median balanced option returned a whopping 16.3 per cent in 2013, but 2018 could see a return to negative returns.

Image: SuperRatings
Image: SuperRatings
It’s not so bad

Sure, a negative annual return sounds dire.

However superannuation is a long-term game, and measuring over longer periods presents a much more soothing picture.

While November returned -0.6 per cent, measuring over the year to 30 November reveals a return of 2.2 per cent.

The five years to 30 November saw 6.8 per cent returned to investors and over 10 years the median balanced option has return 7.9 per cent.

This means superannuation savers are still well ahead over that period.

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