Super fund recovery maintains momentum

May continues the recovery in superannuation with another month of steady performance figures, as confidence remained high despite lagging vaccinations and snap lockdowns.

According to SuperRatings’ data, the median balanced option rose an estimated 1.1% in May, while the median growth option rose an estimated 1.3% and the median capital stable option rose an estimated 0.6%. Over the 2020-21 financial year to date, the median balanced option has returned 15.8%, and positions funds to end the financial year on a high after the rebound in financial markets in the second half of 2020 and strong growth momentum through the start of 2021.

Accumulation returns to May 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index 15.8% 17.0% 7.6% 8.0% 7.7% 8.0%
SR50 Growth (77-90) Index 19.8% 21.1% 8.9% 9.1% 8.6% 8.9%
SR50 Capital Stable (20-40) Index 6.7% 7.1% 4.3% 4.4% 4.6% 5.1%

Source: SuperRatings estimates

ension returns were also positive in May. The median balanced pension option returned an estimated 1.3% over the month and 17.1% over the financial year to date. The median pension growth option returned an estimated 1.4% and the median capital stable option gained an estimated 0.6% through the month.

Pension returns to May 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index 17.1% 18.4% 8.3% 8.8% 8.3% 8.9%
SRP50 Growth (77-90) Index 21.0% 22.2% 9.5% 9.9% 9.6% 9.9%
SRP50 Capital Stable (20-40) Index 7.4% 8.1% 5.0% 5.1% 5.1% 5.7%

Source: SuperRatings estimates

The chart below shows the return to the median balanced option over each financial year since the inception of the superannuation system. As well as the average return over this complete period.

It is a good news story for Australian superannuation members despite the impacts of the pandemic, with a strong market recovery supporting an estimated return of 16.0% for the financial year to 11 June 2021. The benefits of the system are reinforced with the average return of 7.3% irrespective of the ups and downs we have seen due to market events such as the Global Financial Crisis and COVID-19.

*Note: 2020/21 estimate is as at 11 June 2021

“As we reflect on the financial year to date, May is the eleventh month in a row we have seen a positive result for the median balanced fund and we are on track to see a double-digit return for the year ending 30 June 2021.” Said Mr Rappell.

The RBA left the cash rate unchanged at a record low of 0.1% during its June meeting, as widely expected. With policymakers reaffirming their commitment to maintaining highly supportive monetary conditions until at least 2024 when actual inflation is expected to be within the 2-3% target.

“While strong performance this year is pleasing, market volatility prevails and we are erring on the side of caution in terms of the future outlook, with equity markets likely to provide investors with a bumpy ride. Further with rates remaining at record lows, more defensive assets such as cash and bonds have delivered meagre returns, which is impacting retirees’ incomes.” Continued Mr Rappell.

Release ends

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