Archive for category: Lonsec Retirement Perspectives

While inflation indicators continue to be closely watched, markets recorded a positive return in March following the slight fall in February, closing the first three months of 2023 on a positive note. Leading superannuation research house SuperRatings estimates that the median balanced option generated a return of 0.9% for March and 3.4% for the first three months of the year.

While the Reserve Bank paused their increases to the cash rate in April after 10 consecutive rises, significant uncertainty remains over the direction of the federal funds rate. While markets may anticipate a pause; there has been no pause in volatility as half of the previous 8 months returns were negative, with further volatility remaining the outlook for the remainder of the financial year.

The median growth option also rose by an estimated 0.9% over March, while the median capital stable option rose by an estimated 1.0% for the month.

Accumulation returns to March 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	0.9%	0.6%	8.9%	6.1%	6.9%	7.4%
SR50 Capital Stable (20-40) Index	1.0%	0.9%	3.9%	3.3%	3.9%	4.5%
SR50 Growth (77-90) Index	0.9%	0.6%	10.9%	7.2%	8.0%	8.7%

Source: SuperRatings estimates

Pension accounts provided slightly better returns over the period, with the median balanced pension option rising an estimated 1.1%. The median capital stable pension option is also estimated to have gained 1.2% over the month while the median growth pension option is estimated to rise by a slightly smaller 0.9% for the same period.

Pension returns to March 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	1.1%	0.4%	9.9%	6.6%	7.7%	8.1%
SR50 Capital Stable (20-40) Index	1.2%	1.0%	4.5%	3.7%	4.4%	4.9%
SR50 Growth (77-90) Index	0.9%	0.2%	11.8%	7.9%	8.9%	9.4%

Source: SuperRatings estimates

“Super funds continue to demonstrate their ability to capture upside benefits for members when they are available in the market while managing for market volatility through diversification. As we edge closer to the end of the financial year the outlook feels slightly more stable, although there is still a chance that annual returns could drop back into negative territory depending on the final quarter of the financial year”, commented Executive Director of SuperRatings, Kirby Rappell.

“While there has been significant ups and downs over each month in the year so far, the estimated financial year to 31 March return sits at 6.6%. Superannuation remains a long term investment for most and these shifts also have a much smaller impact when considering 10 year performance. Funds are well equipped to navigate changing markets, with 10 year performance estimated to be 7.4% and demonstrating resilience to date” Mr Rappell added.

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We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

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

As markets focus on the persistence of inflation, returns were subdued over the month with leading superannuation research house SuperRatings estimating that the median balanced option generated a return of -0.4% for February.

With the peak in the federal funds rate still uncertain, we expect markets to remain volatile and members should expect further ups and downs in their balances over the coming months. Despite this volatility, we have still seen a modest positive return over the past year.

The median growth option and the median capital stable option also fell by an estimated -0.4% in February, as funds continue to navigate high levels of uncertainty across markets.

Accumulation returns to February 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-0.4%	0.8%	5.1%	5.8%	7.1%	7.3%
SR50 Capital Stable (20-40) Index	-0.4%	-0.2%	1.9%	3.1%	3.9%	4.4%
SR50 Growth (77-90) Index	-0.4%	1.4%	6.4%	6.7%	8.2%	8.5%

Source: SuperRatings estimates

Pension returns faced a similar moderate fall over February, with the median balanced pension option down an estimated -0.5%. The median capital stable pension option is also estimated to have fallen by -0.5% over the month while the median growth pension option is estimated to fall by a slightly smaller -0.4% for the same period.

Pension returns to February 2023

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-0.5%	0.6%	5.8%	6.2%	7.9%	8.0%
SR50 Capital Stable (20-40) Index	-0.5%	0.0%	2.1%	3.4%	4.3%	4.8%
SR50 Growth (77-90) Index	-0.4%	1.2%	6.9%	7.4%	9.2%	9.3%

Source: SuperRatings estimates

“While super funds are estimated to have had negative returns over February, super fund returns remain much less volatile than equity markets. This demonstrates the benefits of diversification and the ability of funds to weather these markets conditions with competitive outcomes for their members.”, commented Executive Director of SuperRatings, Kirby Rappell.

While the response to inflation has been swift, there is a silver lining for those members close to retirement who may have greater reliance on cash returns. Rising interest rates are now flowing back through to member’s cash returns with the SR50 Cash index return rising since May 2022 in line with the RBA cash rate. The chart below displays the monthly and rolling one year return for cash since May 2022.

Cash returns for the month of May 2022 were less than 0.1%, with members seeing an annual return on cash of just 0.2% for the 2022 financial year. This was less than the cash return for January 2023 meaning members would have earned more on their superannuation invested in cash over the month of January than they did for the entire year to June 2022. If we see the current level of cash returns remain, we expect to see outcomes rising quickly towards 4-5%.

“For those members seeking more stability or cash flow to support pension withdrawals, rising cash returns will be a welcome trend; however, cash returns remain materially below the current level of inflation and are unlikely to be of benefit for younger members. We recommend members seek advice from their fund or a trusted adviser before making changes to their investment strategy.” Mr Rappell added.

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We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

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

Leading superannuation research house SuperRatings estimates that the median balanced option generated a return of 2.6% in November, maintaining the momentum from October.

While inflation remains elevated, some improvement in equity market sentiment helped funds to regain some of the losses from the beginning of the financial year. Uncertainty remains however, as people prepare for the Christmas purchasing season, and members should expect to continue to see their super balances bouncing up and down over the coming months.

The median growth option increased by an estimated 3.2% in November, while the median capital stable option which has less exposure to share markets delivered a smaller positive result, with a rise of 1.6%.

Accumulation returns to November 2022

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	2.6%	-1.3%	4.6%	5.9%	6.7%	8.0%
SR50 Capital Stable (20-40) Index	1.6%	-1.4%	2.1%	3.2%	3.9%	4.7%
SR50 Growth (77-90) Index	3.2%	-1.4%	5.5%	6.8%	7.7%	9.3%

Source: SuperRatings estimates

Pension returns also rose in November, with the median balanced pension option up an estimated 3.0%. While an increase of 3.4% was estimated for the median growth option and 1.8% for the median capital stable pension option.

Pension returns to November 2022

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SRP50 Balanced (60-76) Index	3.0%	-1.8%	5.0%	6.5%	7.3%	8.8%
SRP50 Capital Stable (20-40) Index	1.8%	-1.5%	2.3%	3.4%	4.2%	5.1%
SRP50 Growth (77-90) Index	3.4%	-2.1%	5.9%	7.6%	8.5%	10.1%

Source: SuperRatings estimates

“Funds have faced a tough calendar year, though performance has improved over the last couple of months. If we see a small negative return or even a flat return for the typical balanced option for 2022, depending on how December plays out, this would be a better outcome than anticipated a couple of months ago”, commented Executive Director of SuperRatings, Kirby Rappell.

Despite the difficult calendar year to date, superannuation remains a well performing investment over the long term, with an average 6.2% p.a. return since 2000. Mr Rappell commented, “While we expect to see continued ups and downs over the coming year, the recent recovery is good news for members who focused on the long term and stuck to their investment strategy. As the end of the year approaches, we encourage members to review their superannuation with a focus on their long-term risk tolerance to ensure their super is set up for the year ahead. There are a variety of tools to help determine the level of ups and downs you’re comfortable with, as well as the ability to call your fund or adviser for support. Hopefully, this will allow people to better cope with the bumps along the way, as we see super providing improved outcomes for people in retirement over time.”

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

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

Leading superannuation research house SuperRatings estimates that the median balanced option delivered a return of -0.5% in August, driven by losses across developed markets following an accelerated interest rate response to inflationary pressures.

Another 50-basis point increase in the Reserve Bank of Australia’s cash rate saw it reach 2.35% in August, the fifth consecutive rise reinforcing the bank’s strong commitment to trying to slow runaway inflation.

The median growth option fell by an estimated -0.4%, while the median capital stable option delivered a similar negative result, with a decrease of -0.5%.

Accumulation returns to August 2022

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SR50 Balanced (60-76) Index	-0.5%	-3.8%	5.0%	6.3%	6.7%	8.0%
SR50 Capital Stable (20-40) Index	-0.5%	-2.5%	2.1%	3.4%	3.9%	4.8%
SR50 Growth (77-90) Index	-0.4%	-4.8%	6.0%	7.3%	7.7%	9.4%

Source: SuperRatings estimates

Pension returns also decreased in August, with the median balanced pension option down an estimated -0.6%. While a fall of -0.5% was estimated for the median growth option and -0.6% for the median capital stable pension option.

Pension returns to August 2022

	Monthly	1 yr	3 yrs (p.a.)	5 yrs (p.a.)	7 yrs (p.a.)	10 yrs (p.a.)
SRP50 Balanced (60-76) Index	-0.6%	-4.1%	5.4%	6.8%	7.2%	8.9%
SRP50 Capital Stable (20-40) Index	-0.6%	-2.9%	2.1%	3.6%	4.0%	5.2%
SRP50 Growth (77-90) Index	-0.5%	-5.2%	6.5%	8.1%	8.4%	10.1%

Source: SuperRatings estimates

Executive Director of SuperRatings, Kirby Rappell commented, “Over the month of August we have seen a slight pullback in the strong recovery in returns we saw in July. While it is a small negative result this month, this reflects the volatility across investment markets, with elevated inflation levels continuing to pose challenges across markets. Another interest rate rise impacted investment returns, though the silver lining here is that this may benefit retirees who are deriving an income from their pension accounts through exposure to cash.”

Setting a long-term strategy remains crucial, with this month’s result showing that we are see-sawing between positive and negative returns over the short term, with multiple factors impacting the global economy and investment markets. Super funds typically have processes in place to navigate these uncertain times, so setting a strategy which meets your needs and then remaining focused on the long term remains our key message.

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

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