Super funds should prepare for dip

AFTER four years of double-digit returns, super fund members have been told to prepare for less spectacular gains in the face of market volatility.

Super funds should prepare for dip

AFTER four years of double-digit returns, super fund members have been told to prepare for less spectacular gains.

More than 50 per cent of super assets are invested in domestic and overseas shares, which have performed exceptionally well since 2003 and pushed member balances higher.

But what goes up must come down, and growing instability in financial markets has raised fears this may happen sooner rather than later.

Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos said maintaining consumer confidence during a market downturn was a top priority for the industry.

"We've had a wonderful ride on the market, but we will have a dip somewhere along the line,'' she says.

"People like good returns, but there is volatility in those returns. If you're going to get growth over the longer term, you're going to have volatility and just because your fund has a dip doesn't mean that's a good reason to jump out.''

One delegate at ASFA's recent national conference joked that some funds had already tried to soften the blow of potentially lower returns by downplaying their stellar performance this year.

"One of my super funds recently sent me the annual statement and I had to search the fine print for a low-key mention of an 18 per cent return,'' ANOP Research Services chairman Rod Cameron said.

Canny tactics aside, Mr Cameron said most members were ill prepared for a market dip.

Three out of four Australians surveyed expected investment returns to remain as strong as they are, or get even better.

"A downturn will test the marketing skills of the super funds to maintain the current high levels of satisfaction and trust,'' he says.