Super funds lose $55bn as shares crash

SUPERANNUATION funds have taken a $55 billion hit on the back of the worst share market streak Australia has seen since the mid 1990s.

Super funds lose $55bn as shares crash

SUPERANNUATION funds have taken a $55 billion hit on the back of the worst share market streak Australia has seen since the mid 1990s.

The share market is down more than 15 per cent from its peak last October.

The falls have hurt thousands of investors directly but millions indirectly through their superannuation accounts. Australia's trillion dollar superannuation nest egg has taken a $55 billion hit from the carnage of the past nine days.

Pauline Vamos, chief executive of ASFA, the Association of Super Funds of Australia, said yesterday superannuation portfolios were still showing healthy profits but had lost some gloss in the past six months.

"It really depends on the portfolio but you are probably looking at a reduction of possibly 5 per cent,'' Ms Vamos said.

But anyone who had their super funds invested in a diversified portfolio including Australian and international shares, property, cash and local and foreign fixed interest since 2004 would still be 30 per cent better off than someone who had kept all their money in cash over the same period.

According to ASFA, the total value of Australian superannuation investments as at June 30 2007 was $1.1 trillion.

That figure was buoyed by $72 billion injected in the three months to June as individuals scrambled to take advantage of the former federal government's one-off doubling of personal contributions incentive.

Since June, global share markets have been rocked by the US subprime mortgage crisis.

Escalating defaults by borrowers unable to meet higher interest payments on their mortgages have infected the American banking sector, with giant investment banks like Citigroup, Merrill Lynch and Morgan Stanley declaring multi-billion dollar losses.

And on the back of this crisis has come data suggesting the US could be about to slip into recession.

In such circumstances, share markets are tumbling in value with shares listed on the local All Ordinaries index losing $40 billion on Wednesday.

But the superannuation industry is warning members not to panic.

"There's three key messages,'' Ms Vamos said.

"Superannuation is a long term investment and it is incredibly diversified but because they have to make sure the money is there when the member retires, they are across a broad section of assets.''