Market turmoil drags on super balances

THE sharemarket continues to drag down superannuation, with the latest results wiping out $40bn more from retirement nest eggs.

THE sharemarket continues to drag down superannuation, with the latest results wiping out $40 billion more from retirement nest eggs.

Most people, with a growth or balanced investment, lost another 4 per cent in February.

With barely $1 trillion remaining in account balances, the 4 per cent average loss is $40 billion.

According to research house Chant West, this takes the past three months losses to 5.1 per cent for most super funds managed by an industry fund and 6.5 per cent for master trust-managed funds.

Chant West found growth funds have 60-80 per cent of assets in "growth assets'' - shares and property.

In the past month local shares fell 4.6 per cent and international shares lost 10.8 per cent, accounting for the bulk of the super fund losses.

The performance gap between industry funds and master trusts, however, has been caused by different investment allocations.

"Industry funds continued to outperform their commercial rivals, albeit by delivering a smaller negative return,'' Chant West principal Warren Chant said yesterday.

"Given the weakness in listed markets, their decision to maintain higher allocations to unlisted assets has again been rewarded.

"Valuations of unlisted assets may have started to fall but not yet at the rate experienced by listed securities.''

Industry funds, already big investors in unlisted assets, bought even more of these investments.

In the past year they increased their allocation to unlisted assets by another 5 per cent, while reducing their ownership of fixed interest investments. In contrast, master trusts increased their investments in unlisted assets by just 1 per cent.

Despite the big falls by most funds, the worst performing funds to date are the all growth or high growth investment options.

According to Chant West all growth super funds, which have up to 100 per cent invested in shares and property, lost another 9 per cent during the three months to February, taking total losses to 31.4 per cent for the past year.

The slightly less risky category, high growth funds with up to 80 per cent in shares, lost 7.5 per cent in the quarter and 26.8 per cent for the year.

Growth funds, which account for about 80 per cent of all super funds, had losses of 21.2 per cent for the year, while the more conservative balanced funds had losses of 15.8 per cent for the year.