Billions gone as super shrinks

YOUR retirement savings took a dive in June, thanks to a choppy month on the share market.

Billions gone as super shrinks

SUPER funds have turned in their worst annual performance since superannuation became compulsory in 1992.

Volatile share market conditions at the tail end of the financial year means your retirement nest egg is likely to have taken a hiding in June.

Data out from SuperRatings shows that the median balanced super fund – which spreads its money across a broad range of investments - lost 3.9 per cent in June, and 6.39 per cent over the year to June according to data released by SuperRatings.

Funds that had invested heavily in property trusts and were light on alternative assets had done particularly badly, SuperRatings found.

SuperRatings’ managing director, Jeff Bresnahan, said the size of the drop in share market value in June had left most fund managers with “mouths agape”. He said they would struggle to explain the extent of the losses to super fund members.

“At the end of May I don’t think anyone would have envisaged June’s performance. In fact at one stage it looked like funds may sneak back into positive territory.”

Take a closer look

Mr Bresnahan said the recent share market rout had caused super funds to rethink their investments, with many of them significantly increasing how much cash they’re holding.

“A lot of them are holding as much as 20 per cent in cash, where normally they’d only hold about 5 per cent.”

He said the poor results should also be a push for super fund members to look at their options. But he warned against jumping ship because of one bad year, and urged people to look at how their funds had fared over a five year period.

As well as keeping an eye on returns, Mr Bresnahan said you should look at how much your fund manager is charging in fees. This will show up on your annual superannuation statement.

“If you’re paying more than 1.5 per cent of your account balance in fees then you’re paying over the odds,” he said.

Performance gaps

SuperRatings found that the gap between the best and worst performing balanced funds over a 10 year period was 5.56 per cent.

“Had two people invested the same amount in the balanced options of these two funds, the difference in their current benefits would be approximately 68 per cent.”

Top 10 super fund returns for year-ended June

Fund                              Option                                                  Result (%)
Vision SuperSaver      Balanced Growth                               -1.70
PSSap                           Trustee Choice                                   -2.07
MTAA Super                  Balanced                                             -2.14
AUSCOAL Super         Balanced                                              -2.37
OSF Super                    Mix 70                                                   - 2.73
Hostplus                       Balanced                                              -3.50
Agest                             Balanced                                              -3.59
Buss(Q)                        Balanced Growth                                -3.60
QSuper                          Balanced                                              -3.61
Rest                               Core Strategy                                       -4.03

Source: SuperRatings