Look on the bright side for super funds

AS you watch your super nest egg erode in value, try to look on the bright side as funds make the most of bargain-basement prices.

Look on the bright side for super funds

AUSTRALIANS watching their super nest eggs erode in value have been told to look on the bright side as the funds make the most of bargain-basement prices.

Superannuation funds posted average losses of 6.5 per cent last year, and fund investments continue to fall in value.

But the Association of Superannuation Funds of Australia said there was a silver lining to the stock market collapse.

"What super funds are doing is using the cash that comes in via the SGC (superannuation guarantee contributions) to buy some of these stocks, so it is great for super," ASFA chief Pauline Vamos said.

"There is money coming into the funds. When you have cash, you are able to buy. If you speak to a lot of analysts they are saying, 'We are buying at prices we haven't seen in years'. So, if you've got cash, it's a real opportunity."

The Australian stock market lost $28.5 billion in value this week, as the global financial crisis caused a major rout of key shares that made up many superannuation portfolios.

Ms Vamos said it was impossible to predict the market, but advised investors to think of the long term.

"Don't make any rash decisions, because if you get out of the market today, you're getting out at some of the lowest prices," she said.

The Australian Institute of Superannuation Fund Trustees said the dramatic movement in the share market, which fell about 2.4 per cent over the week, had hit super returns hard.

But AIST chief executive Fiona Reynolds said the average return for super fund members over 10 years would still be about 9 per cent.

"While its unsettling for everyone to witness such falls in the short term, history shows us that markets bounce back," she said.

Prime Minister Kevin Rudd said investors should look to the fundamental strength of the Australian economy.

"You look at what's happened with stock markets in response to the global financial crisis and they have gone down, and gone down a lot," Mr Rudd said.

"And that directly affects people's superannuation . . . What I am saying, however, is that there is a strong, credible, robust economic strategy to see Australia through."