Superannuation funds ahead in August with fifth consecutive month of gains

The median balanced fund returned 1.8 per cent in August, taking the financial year to date return to 2.9 per cent.

Growth and capital stable options were estimated to have gained 0.7 per cent for the year.

Superannuation fund balances continued to recover in August, according to SuperRatings, in what was the fifth consecutive month of gains.

Still, the super research house cautioned members to be wary of market volatility as the global pandemic rolls on, saying the recovery is dependent on infection rates and the gradual easing of restrictions around the country.

The median balanced fund returned 1.8 per cent in August, taking the financial year to date return to 2.9 per cent. The gains came as the ASX 200 rose 2.24 per cent in August.

“Australia has navigated the pandemic incredibly well compared to other countries, which has helped boost confidence locally,” said SuperRatings executive director Kirby Rappell.

“Two key contributors are the relative success of Australian governments in managing the pandemic, and the stability that superannuation provides to our economy and financial system.”

SuperRatings said that the lockdown conditions in Victoria would have a significant impact on long-term super fund growth.

“We expect more ups and downs as the outlook evolves,” Mr Rappell said. “The theme for the second half of 2020 will hopefully be one of continued recovery, but this will likely be unevenly spread across markets and regions.”

SuperRatings data showed that the one-year return for the median balanced option moved back into the black in August, recording an estimated 0.8 per cent, but still remained down 2.4 per cent on the start of 2020.

Growth and capital stable options were estimated to have gained 0.7 per cent for the year.

Pension returns fared slightly better, with the median balanced pension option estimated to have risen 0.9 per cent, and the growth option 1 per cent.

SuperRatings said overall, funds had performed well over the long term, estimating that a balanced option fund with a balance of $100,000 in August 2005 would now be worth $238,286.