Higher than expected inflation data has shifted the discussion around the outlook for interest rates in April, resulting in falling equity and fixed interest markets both in Australian and globally. This was reflected in superannuation returns as funds reported their first negative monthly return since October 2023. Leading superannuation research house SuperRatings estimates that the median balanced option fell by -1.6% over April.
“Sticky inflation caught up with investment markets in April as the reality of interest rates being higher for longer was being digested, and this flowed through to super returns” commented Kirby Rappell, Executive Director of SuperRatings. “But we encourage members to remember that this is the first time in six months that superannuation balances have fallen, and funds are still up over 7% for the financial year with two months remaining.”
The median growth option fell by an estimated -1.7% for the month, while the median capital stable option, with higher allocation to defensive assets fell by a more modest -1.0%.
Accumulation returns to 30 April 2024
| Monthly | FYTD | 1 yr | 3 yrs (p.a.) |
5 yrs (p.a.) |
7 yrs (p.a.) |
10 yrs (p.a.) |
|
| SR50 Balanced (60-76) Index | -1.6% | 7.1% | 8.1% | 5.3% | 6.2% | 6.6% | 7.0% |
| SR50 Capital Stable (20-40) Index | -1.0% | 4.4% | 4.5% | 2.7% | 3.3% | 3.7% | 4.4% |
| SR50 Growth (77-90) Index | -1.7% | 8.5% | 9.9% | 6.2% | 7.6% | 7.9% | 8.2% |
Source: SuperRatings estimates
Pension returns similarly fell over April, with the median balanced pension option falling by an estimated -1.9%. The median capital stable pension option is estimated to have fallen by -1.1% over the month while the median growth pension option is estimated to fall -2.0% for the same period.
Pension returns to 30 April 2024
| Monthly | FYTD | 1 yr | 3 yrs (p.a.) |
5 yrs (p.a.) |
7 yrs (p.a.) |
10 yrs (p.a.) |
|
| SRP50 Balanced (60-76) Index | -1.9% | 7.7% | 8.9% | 5.8% | 6.9% | 7.3% | 7.7% |
| SRP50 Capital Stable (20-40) Index | -1.1% | 4.8% | 5.0% | 2.9% | 3.6% | 4.1% | 4.9% |
| SRP50 Growth (77-90) Index | -2.0% | 9.4% | 10.9% | 6.7% | 8.2% | 8.6% | 8.9% |
Source: SuperRatings estimates
The trajectory for interest rates continues to drive the outlook for returns and while the Reserve Bank of Australia kept interest rates on hold this week, the prospect of interest rates remaining higher for longer remains very real. “We continue to believe there will be ups and downs over the coming months, however funds have consistently demonstrated their ability to navigate changing markets and provide strong long term outcomes for members. Setting and sticking to a long term strategy remains the best approach to achieving long term success and we encourage any member thinking of changing their strategy to seek advice from their fund or a trusted financial adviser” concluded Mr Rappell.
Release ends
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For more information contact:
Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au
