A year on from the start of the COVID-19 pandemic, super funds continue to enjoy in the market recovery as vaccine rollouts and the return to more normal economic conditions lift confidence.

Members have welcomed the return to a more stable footing, but markets are still more volatile compared to the pre-COVID-19 situation. Much also depends on the speed and efficacy of vaccination programs globally, with some regions facing delays and logistical challenges.

According to SuperRatings data, the median balanced option rose an estimated 0.7% in February and the median growth option rose an estimated 1.1%, while the median capital stable option fell an estimated 0.1%. Over the 2021 financial year to date, the median balanced option returned 9.7%, reflecting the strength and speed of the post-pandemic recovery, which has been extended through the start of 2021.

The federal government said Australian health professionals will soon be delivering over 500,000 vaccinations a week, with general practitioners set to assist in the COVID-19 vaccine rollout in coming weeks. Australia will keep its international borders shut for at least another three months.
“Super has notched up another positive month, thanks to the vaccine narrative and the relative strength of Australia’s economic recovery, which has exceeded expectations,” said SuperRatings Executive Director Kirby Rappell.

“Markets are still bumpy and members should not be surprised to see the value of their super fluctuate over the course of 2021. With the severe shock of the pandemic now behind us, the challenge will be gradually transitioning away from government support programs and getting households and businesses back on a sustainable footing.”

Accumulation returns to end of February 2021
FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a)
SR50 Growth (77-90) Index 12.0% 7.4% 7.0% 9.2% 7.9% 8.2%
SR50 Balanced (60-76) Index 9.7% 5.9% 6.1% 8.0% 7.1% 7.6%
SR50 Capital Stable (20-40) Index 4.1% 2.0% 3.7% 4.5% 4.4% 4.8%

Source: SuperRatings estimates

Pension returns were also positive in February. The median balanced pension option returned an estimated 0.6% over the month and 10.3% over the financial year to date. The median pension growth option returned an estimated 1.1%, whereas the median capital stable option was down an estimated 0.2% through the month.

Pension returns to end of February 2021
FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a)
SRP50 Growth (77-90) Index 13.1% 7.9% 7.5% 10.1% 8.7% 9.1%
SRP50 Balanced (60-76) Index 10.3% 6.2% 6.7% 8.8% 7.8% 8.3%
SRP50 Capital Stable (20-40) Index 4.4% 2.3% 4.2% 5.2% 4.9% 5.6%

Source: SuperRatings estimates

The pace of Australia’s economic recovery was reflected in the recently released GDP figures for the December 2020 quarter, which showed growth of 3.1%, taking the yearly rate from -3.7% to -1.1%. The result marked the second straight strong quarter of growth, helped by high levels of monetary and fiscal stimulus.

The February and March earnings season revealed a corporate environment still impacted by COVID-19, with earnings down in aggregate and companies opting to hold more cash, although the lift in dividends has been a key positive development for Australian investors.
According to SuperRatings, the pandemic has been a critical case study for super funds and will inform the way they manage risks and respond to member needs into the future.

“A lot is happening in super at the moment, from regulatory change to further consolidation,” said Mr Rappell.
“Funds have shown they are able to adapt to rapid changes on these fronts, while also managing risks and attending to the needs of members through a challenging market. The pandemic period will serve as a masterclass in change management for superannuation that will lead to a more robust and agile industry in the long run.”

Release ends
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For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
E: Kirby.Rappell@superratings.com.au

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